This article first appeared in The Edge Malaysia Weekly on May 9, 2022 - May 15, 2022

GRAB Holdings Inc is said to be looking to acquire a stake in AMMB Holdings Bhd (AmBank), and the sellers are likely to be the banking group’s two largest shareholders — Australia and New Zealand Banking Group Ltd (ANZ), which has a 21.68% stake, and Tan Sri Azman Hashim, who holds 11.83% equity interest — according to several persons familiar with the matter.

Interestingly, this potential stake acquisition comes at a time when a merger proposal is said to be on the table. Speculation is rife that AmBank and RHB Bank Bhd are possibly revisiting a merger proposal, as the former is seen as having started a new chapter after reaching a global settlement with the Ministry of Finance (MoF) on all outstanding claims and actions in relation to the financial transactions of 1Malaysia Development Bhd (1MDB).

Grab, which made its debut on the Nasdaq about five months ago, has managed to expand its war chest with the fresh capital raised from its initial public offering in the US. While the company is still in the red, with a wider loss of US$3.4 billion in 2021 from US$2.6 billion the year before, it was sitting on US$9 billion in cash liquidity as at Dec 31, 2021, and had net cash liquidity of US$6.8 billion.

When contacted on the potential stake acquisition, Grab says in an email reply that “We don’t comment on market rumours and speculation”. Likewise, ANZ’s spokesperson in Melbourne tells The Edge that the Australia-based financial group does not comment on rumours and speculation, without revealing whether it is still on the lookout for a buyer for its stake in AmBank.

Several years ago, ANZ decided to refocus on its home turf and reduce its exposure to Asia, including Malaysia. In 2016, it shut its business lending to small and medium enterprises in five Asian countries, including Singapore, and announced that it was also considering the sale of its minority stakes in banks in Malaysia, Indonesia and China.

The other substantial shareholders of AmBank are the Employees Provident Fund (9.62%) and Amanah Saham Nasional Bhd (7.44%).

It is not known how much Grab would be willing to pay for a stake in AmBank, which is currently trading at a price-to-book value of about 0.75 times.

The banking group had been through a rough patch over the past two years. When the lender announced that it had incurred a hefty RM2.83 billion global settlement with MoF, it sent a shock wave to the investing public, as the bank had been denying market talk that it would face contingent liabilities in relation to the financial transactions of 1MDB.

Grab’s interest in a conventional bank may have raised some eyebrows as its unit GXS Bank was recently granted a digital bank licence by Bank Negara Malaysia. Subject to regulatory approvals, GXS Bank will hold a 55.45% stake in the proposed digital bank, says the ride-hailing giant.

However, this is not the first time Grab would be buying into a conventional bank. Earlier this year, it acquired a 16.3% stake in Indonesia-based PT Bank Fama International “to pursue banking opportunities” in the archipelago.

In fact, other technology players have made similar strategic moves to find a launching pad for digital banking services. For example, Gojek increased its stake to 22.16% in Bank Jago after it acquired about US$155 million worth of shares in December 2020. Not long after that, Bank Jago had its digital bank services up and running.

Last year, Sea Ltd’s e-commerce arm Shopee acquired a stake in Indonesia-based Bank Kesejahteraan Ekonomi, with the aim of transforming it into a digital bank. Singapore-based Sea is a member of one of the five consortiums that recently received a digital bank licence in Malaysia. One of its partners is YTL Digital Capital Sdn Bhd.

Would combining online and offline banking services make good business sense for AmBank going forward, or would a merger with another traditional bank be a better move? This is something its shareholders may need to contemplate.

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