20000215

54 Malaysian banks merged to create 10 big groups

KUALA LUMPUR: Malaysia's central bank announced on Monday it had approved the formation of 10 new banking groups to consolidate all the country's 54 banks and finance houses.

The decision is part of a sweeping merger programme to strengthen the sector against international competition.

Bank Negara Malaysia named the 10 "anchor" banks as Malaysian Banking, Bumiputra-Commerce Bank, RHB Bank, Public Bank, Arab Malaysian Bank, Hong Leong Bank, Perwira Affin Bank, Multi-Purpose Bank, Southern Bank and EON Bank.

The merger programme must be completed by year-end.

Each group will have a minimum of two million ringgit (526 million dollars) in shareholders' funds and an asset base of at least 25 million ringgit, the central bank said in a statement.

The central bank last October dropped its original Draconian plan which would have forced the financial institutions to merge under six groups, each led by an "anchor" bank selected by Bank Negara in advance.

Banks were given the freedom to choose partners but were ordered to reach agreement in principle by the end of last month.ÑAFP