This article first appeared in The Edge Malaysia Weekly on April 21, 2025 - April 27, 2025
FOLLOWING in Sarawak’s footsteps, the Selangor state government is considering an investment in a bank. According to sources, Selangor is looking at three banks — MBSB Bhd (KL:MBSB), Alliance Bank Malaysia Bhd (KL:ABMB) and AMMB Holdings Bhd (KL:AMBANK) — and discussions have already begun.
It is understood that Selangor has been in talks with MBSB since late last year.
“The talks are still at the early stage; it is likely that the Selangor state government is looking to be a substantial shareholder,” a source tells The Edge.
Another source says Selangor is looking to buy a stake of at least 5% in a bank. “That is the start, with plans to increase the stake, too,” he says.
At the 5% threshold, prior approval from Bank Negara Malaysia is required before any discussions commence. Under the Financial Services Act 2013 (FSA), institutional shareholdings in financial institutions are capped at 20%.
When queried, Selangor Menteri Besar Datuk Seri Amirudin Shari does not deny that the state is looking to diversify into the financial sector, given that a large portion of its revenue is derived from land.
“We are looking to further diversify into the financial sector and discussions are underway in line with Bank Negara Malaysia’s strict guidelines for the state government of Selangor to explore a stake in an existing financial institution, either directly or through a state-owned company,” he tells The Edge via email.
“I believe this is vital to Selangor’s sustainability in the medium to long term, especially as land becomes more finite. This approach will allow the state administration to reduce the reliance on land premiums through strategic investments which will provide sustainable revenue, allowing us to channel these returns through longer-term economic policies while reaffirming our commitment to improving the quality of life for Selangorians, so that no one is left behind.”
The Selangor state government’s consideration of a possible investment in a bank follows Sarawak’s move last November, when it acquired a 31.25% stake in Affin Bank Bhd (KL:AFFIN), becoming the bank’s largest shareholder.
“There is a bigger plan to it. The Selangor state government is looking to have its own payment system and ‘superapp’, with various functions tied to it,” the second source says.
Selangor already has its own apps, including Selangkah, which focuses on healthcare and welfare and also functions as an e-wallet. The state is also developing an e-wallet called Wavpay, under Menteri Besar Selangor (Inc).
It is understood that the state government is looking to launch another app this year that will combine all the applications under one platform.
Last November, Sarawak became the largest shareholder of Affin Bank, after the completion of a deal to buy a 27% stake for RM1.78 billion from the Armed Forces Fund Board (LTAT) and its unit Boustead Holdings Bhd. Prior to that, the state owned a 4.95% stake in Affin Bank acquired in April 2023.
At 31.25%, Sarawak became the first state government in Malaysia to own the largest stake in a bank, following the completion of the LTAT deal.
Last September, Sarawak Premier Tan Sri Abang Johari Tun Openg said the decision to invest in Affin Bank was driven by the need to take a strategic step to create a financial platform and synergy with a sound and competent bank, which was essential for the state to elevate its economic potential.
It is worth noting that MBSB is the only bank in the country with its headquarters in Selangor.
In October 2023, MBSB acquired MIDF from Permodalan Nasional Bhd (PNB) for RM1.01 billion via the issuance of 1.05 billion new shares at 96.52 sen each. The merger saw the emergence of PNB as a substantial shareholder of MBSB with a 12.78% stake while the Employees Provident Fund’s (EPF) interest in MBSB was reduced to 57.45% from 65.78%.
Last Thursday, shares in MBSB closed at 69.5 sen, 28% lower than the 96.52 sen valuation for the bank in the merger. At its closing price, MBSB was traded at a book value of 0.58 times.
EPF is a substantial shareholder of several local banks and the biggest shareholder of RHB Bank Bhd (KL:RHBBANK), with 39.03%, and AMMB, with 12.76%.
Meanwhile, at AMMB, there has been much speculation in the past that its founder, Tan Sri Azman Hashim, was looking to sell his 11.83% interest in the fifth-largest banking group by assets. So far, the said talks have yet to bear any fruit.
Last week, Sarawak Premier Abang Johari dismissed the report by The Edge that the state was keen to acquire a stake in AMMB and merge it with Affin Bank. He said, however, that Sarawak was always ready to negotiate with any entity that wanted to collaborate with the state government.
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