This article first appeared in The Edge Malaysia Weekly on October 23, 2023 - October 29, 2023

ALLIANCE Bank Malaysia Bhd announced two weeks ago that it plans to relocate its corporate office to a 24-floor office suite that it is acquiring in Jalan Ampang. It joins a growing list of Malaysian banks that have moved, or plan to move, their headquarters (HQ) to spanking new buildings in the last four years.

These include Malayan Banking Bhd (Maybank), Affin Bank Bhd, Malaysia Building Society Bhd (MBSB), HSBC Bank Malaysia Bhd and Standard Chartered Bank Malaysia Bhd. Of these, only Maybank has yet to move — it is expected to relocate from its current HQ in Menara Maybank (Jalan Tun Perak) to Menara Merdeka 118, the world’s second-tallest building, in 2025. The building is owned by its largest shareholder Permodalan Nasional Bhd.

Prior to 2019, such moves by banks were few and far between. Notably, Bank Islam Malaysia Bhd relocated its corporate HQ to Menara Bank Islam on Jalan Perak in 2011; CIMB Group Holdings Bhd moved to Menara CIMB in KL Sentral in 2015; and Hong Leong Bank Bhd moved to Menara Hong Leong in Damansara City in 2017. The latter two own their new buildings.

So, what’s driving this recent trend of banks moving their headquarters? According to a senior banking analyst, while each bank had its reasons for moving, it generally boils down to three things.

“First, there are ESG (environmental, social and governance) considerations. In order to be truly aligned with ESG, banks need to be in green-certified buildings. Second, a lot of their existing buildings are old and dated. And third, some may have been nudged into moving to support [government-backed] developments, among other reasons they may have had for moving,” the analyst tells The Edge.

In Alliance Bank’s case, there was an additional push factor as the lease for its current building is expiring soon, sources say. It is understood that the bank will nevertheless need to extend the lease as the new building it is moving into will only be completed by the end of November 2024.

Its current HQ of 28 years is Menara Multi-Purpose on Jalan Munshi Abdullah, which occupies about 20 floors. The 29-year-old building is owned by the Malaysian Chinese Association (MCA).

In a stock exchange filing on Oct 9, Alliance Bank said it would be buying the 24-floor office suite in Jalan Ampang, developed by a subsidiary of Oxley Holdings Ltd, for RM405.84 million. The acquisition also includes four adjoining retail lots.

According to the bank, the strategic location of the properties at the commercial centre of KLCC and a dedicated building with its name will improve its visibility and branding. “Also, the acquisition would provide the staff a fresh working environment with better amenities. The properties are earmarked as a green-certified building and this will form part of the bank’s sustainability journey to be a more sustainable and resilient organisation,” it said.

The acquisition will be funded via the capital market and internal funds, it added.

Providing perspective from a property lens, Tan Ka Leong, group managing director of CBRE | WTW, says many of the banks that had recently moved were forced to deal with the reality that they were occupying aged buildings at a time when ESG considerations were becoming increasingly vital.

“Many of the banks’ current buildings were coming up to 20 to 30 years old. To convert such old buildings to incorporate the latest technology and ESG-specific [elements] into them would have been very challenging, not to mention costly — it would require substantial capital expenditure — and disruptive to operations. They found it more sensible to move into new buildings that already suit their requirements,” he tells The Edge.

ESG was indeed a major consideration for the banks’ recent moves, particularly the foreign banks. “They take ESG very seriously and this needs to be reflected in the green buildings they occupy,” he remarks.

Another equally important factor driving the banks to new buildings is the need to attract and retain young talent. “The younger generation have higher expectations of their workplace. Apart from wanting vibrant workspaces, they also want nearby places to hang out in after work hours, so having things like food-and-beverage outlets and gyms become an important consideration for banks,” he says.

He notes that most of the banks’ new HQs are in areas that focus on transit-oriented developments, which aim to bring people, activities, buildings and public space together within easy walking distance between them.

Tan believes it has also been a good time for banks to move into new buildings, whether as tenants or owners, as the oversupply of Grade A office buildings meant they were likely to be offered good rates and/or incentives.

Analysts that The Edge speak to say they see no issue with banks owning their own buildings. “It’s their HQ, it’s not like they’re buying the building for investment purposes. I’d rather they purchase the building than be tenants, as it provides a sense of having stability in operations, which is crucial for banks. There’s no chance of them having to move out in case of issues with the landlord,” one states.

He notes that in Maybank’s case, though, this should not be a problem as the owner of the building it is moving into is its major shareholder PNB.

In September last year, Maybank announced that it had entered into a 21-year tenancy agreement with PNB, consisting of an initial term of three years and renewal for a further six three-year terms. The country’s largest bank by assets will occupy 33 floors in Menara Merdeka 118 and will have naming and signing rights over the building.

Interestingly, Maybank’s total occupancy of 650,000 sq ft at Menara Merdeka 118 will be less than its current net lettable area of 1.09 million sq ft at Menara Maybank, in line with its strategy to use workspace optimally and smartly while also adopting new-age work practices of remote working.

This could be a trend with other banks too as most lenders continue to offer employees some form of work-from-home flexibility even after the pandemic and, hence, require less office space.

Affin Bank relocated its HQ to the brand-new 43-storey Menara Affin@TRX (in Tun Razak Exchange) in April this year from its old building in Jalan Raja Chulan, Kuala Lumpur. Back in 2015, it had bought 1.25 acres of land in TRX for RM255 million. Then, in 2018, it awarded a RM505 million contract to IJM Corp Bhd to build its new HQ there.

In March last year, HSBC too officially opened its new HQ, Menara IQ, in TRX. It owns the 33-storey building, on which it invested US$250 million, and occupies 22 floors as the anchor tenant, leasing out the remaining floors.

As for MBSB, it moved into its new building, Menara MBSB Bank, in PJ Sentral in February 2021. The group, via a property-related subsidiary, had bought the 26-storey building in late 2012 for RM240 million and invested a further RM60 million in renovations. Earlier this month, MBSB completed its acquisition of Malaysian Industrial Development Finance Bhd from PNB. It is likely that MIDF staff will move into the PJ Sentral building.

Meanwhile, Standard Chartered Bank moved to its new head office in Equatorial Plaza on Jalan Sultan Ismail in August 2019, occupying three floors of the 52-storey tower, where it also operates its main branch. Great Eastern Life Assurance (Malaysia) Bhd is the owner of the office tower. The bank was previously based nearby at Menara Standard Chartered for 15 years. 

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