Monday, June 14, 2010

NGO rap Bank Negara for rejecting Affin’s offer for EON

June 13, 2010

KUALA LUMPUR, June 13 — Malay rights group Perkasa has asked Datuk Seri Najib Razak to intervene in Bank Negara Malaysia’s decision to reject Affin Holdings Bhd’s offer to take over another bank, EON Capital Bhd.

The group has tapped the vein of discontent from Malays who object to opening the economy and claimed success when the Prime Minister kept the 30 per cent equity for Bumiputeras in the Tenth Malaysia Plan (10MP).

The latest move is part of Perkasa’s aim to ensure the government maintains Malay rights.

“I want to request for Datuk Seri Najib Razak to immediately intervene in the issue.” Perkasa chief Datuk Ibrahim Ali told reporters here today. Najib is also the Finance Minister.

Bank Negara turned down Affin’s move to enter into talks with EONCap last week, paving the way for Hong Leong Bank Bhd (HLBB) to proceed with its takeover offer for the EON banking group.

Analysts reportedly were not surprised by the decision because of Affin’s financial standing and the fact that it was a weaker bank that was trying to buy up a bigger and stronger bank.

However, the independent Pasir Mas MP said Perkasa views the central bank’s decision as lopsided and an interference in a business transaction.

He said Affin had made a good offer and was supported by the Employee Provident Fund (EPF) which is a substantial shareholder of EONCap.

However, he claimed that Bank Negara decided to reject the negotiations which now gives Hong Leong Bank the advantage.

He said this was extraordinary because Hong Leong’s earlier offer was rejected but Bank Negara’s move allows it to continue negotiations with EONCap despite the fact that Affin had made a better offer.

Ibrahim said questions remain on whether Bank Negara had spoilt the chances of Affin, whose major shareholder is the armed forces pension fund or Lembaga Tabung Angkatan Tentera.

He said since the armed forces pension fund was the largest shareholder, the issue is of government interest.

He argued that the merger between Affin and EONCap, if allowed, had the potential to create the sixth largest banking group in terms of assets and fourth largest in. terms of branches.

Ibrahim said Bank Negara needed to study the matter more carefully.

He added that Bank Negara’s decision also had political implication because it could affect the government’s image and the prime minister’s leadership.

He added that it was strange that EONCap, which was founded by the government and public funds, is to be allowed to change hands to private ownership.

“We ask Bank Negara to be more transparent and to review their decision,” he said.

Ibrahim added that Perkasa and the Malay Consultative Council (MPM), which was representing, view the issue seriously.

He also threatened that Perkasa would “gather outside Bank Negara” if it had to, adding that EONCap should remain as it is if a deal could not be struck with Affin.

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