KUALA LUMPUR (Aug 11): The government risked assuming liabilities of about RM74.5 billion if a massive panic withdrawal, or “bank run”, had occurred in 2018, said Minister in the Prime Minister’s Department (Religious Affairs) Dr Zulkifli Hasan.
He added that at the time, efforts to secure standby financing as a contingency measure in the event of a bank run had also failed.
“If TH had collapsed, the government would have faced potential liabilities of about RM74.5 billion, as all deposits with TH are fully guaranteed by the government,” he said during a ministerial briefing on the Royal Commission of Inquiry (RCI) report on Tabung Haji (TH), as well as the efforts and measures taken to restore the institution’s financial position, at a special sitting of the Dewan Rakyat Tuesday.
He explained that TH was facing a critical situation where the gap between its assets and liabilities had widened to more than RM10 billion in the fourth quarter of 2018, with only three months to find a solution.
“If assets did not exceed liabilities at the end of the year, TH would not be able to declare a profit distribution for 2018, risking a bank run,” said Zulkifli.
He noted that panic withdrawals did occur in 2019, with net withdrawals totalling RM6 billion within a short period following the announcement of a 1.25% hibah for 2018 in early 2019.
“Imagine if no hibah had been declared. How much panic withdrawal could have occurred?” he said.
He said that technically, TH was insolvent at the time and needed to be rescued, forcing the Pakatan Harapan government to step in with a restructuring plan aimed at restoring TH’s financial position, allowing the institution to return to solvency and remain financially sustainable in the long term.
On July 29, the 211-page RCI report was made public, containing various findings on weaknesses in the institution’s management and operations during the 2014-2020 period.
The report also included 25 recommendations for improvement, 75% of which had been implemented by TH as of July 30.
The government announced the establishment of the RCI in 2021, followed by the appointment of its members on Jan 20, 2022. The report was subsequently presented to the Yang di-Pertuan Agong on Aug 30, 2022.
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