KUALA LUMPUR (Sept 27): Sarawak will be taking control of a 31.25% stake in Affin Bank Bhd (KL:AFFIN), making it the largest shareholder of the bank.
The state government, via its wholly-owned subsidiary SG Assetfin Holdings Sdn Bhd, on Friday signed a delayed share purchase agreement with two Affin Bank shareholders — Lembaga Tabung Angkatan Tentera (LTAT) and Boustead Holdings Bhd — to raise its stake in the bank to 31.25% from 4.8%.
LTAT and Boustead will be divesting about 634.7 million shares representing 26% of its collective stake in the bank. Post-divestment, LTAT and Boustead's collective shareholding in Affin Bank will be reduced to 23% from 49%, according to Affin Bank’s bourse filing on Friday.
Sarawak Premier Tan Sri Abang Johari Tun Openg revealed in an interview with The Edge in July that the state had obtained Bank Negara Malaysia's conditional approval for the deal in June, and that there were minor technicalities that it needed to furnish to the central bank.
At the time, Sarawak was expecting to formalise the deal by August. Last week, Abang Johari said all procedural requirements with BNM had been satisfied, and that the state was on the verge of having its own bank.
During the signing ceremony in Kuching on Friday, he said the decision to invest in Affin Bank was driven by the need to create a financial platform and synergy with a sound and competent bank, which is essential to elevate Sarawak's economic potential. The acquisition is expected to be completed in the fourth quarter of this year.
"The idea of acquiring substantial shares in Affin began with a deep respect and recognition for the banking industry’s pivotal role in the development of our economy and society. Banks are the engines that drive the economic growth of a nation and [are] essential for business development and financial wellbeing," he said in a speech.
"By leveraging Affin’s extensive network and expertise, we will work together to unlock new opportunities, facilitate access to capital and ignite the entrepreneurial spirit of our people. Together, we will build a financial ecosystem that nurtures innovation, promotes financial literacy and empowers financial literacy, and enables our communities to achieve their aspirations," Abang Jo, as he is affectionately known, added.
The premier said Sarawak's strategy to achieve a high-income economy focuses on diversifying the state's economic sectors, reducing dependency on natural resources and attracting investments to create sustainable job opportunities.
On this, Abang Jo said Affin Bank can play a critical role by actively supporting the growth of Sarawak's strategic industries. "Whether it be agro-based ventures, tourism, manufacturing or technology-driven sectors, Affin can provide the necessary financial tools and guidance for businesses to flourish," he said.
For Affin Bank, its president and group chief executive officer Datuk Wan Razly Abdullah said the agreement is not just not just a milestone, but also a "quantum leap" that will propel the bank into a "new frontier of excellence".
"With this strategic move, we aim to reshape the banking landscape through bold innovations and creative solutions, securing our industry emergence and significance for the future," he said.
Wan Razly shared that Affin Bank is currently working to expand its presence in Sarawak, growing from six branches today to an expected 14 branches by the first quarter of 2025.
In addition to Sarawak, Affin Bank is also further expanding its reach nationwide to capture key growth markets, which includes the states of Penang, Johor and Selangor.
"This will see an addition of further 10 branches throughout Malaysia and by the middle of next year, we are expected to be 146-branches strong," he said.
Deputy Defence Minister Adly Zahari, who graced the signing ceremony, said the move is expected to yield substantial positive returns, reflected in competitive and sustainable dividends for LTAT contributors, who are members of the Malaysian Armed Forces.
"LTAT will not only strengthen its long-term financial stability but also ensure that our contributors’ savings consistently benefit from reliable returns and sustainable growth, underscoring our commitment to their financial well-being," he said.