NAZIR NEXT CHAIR OF BANK PEMBANGUNAN?
He may also play role in creation of super development finance institution, say sources
FORMER CIMB Group Holdings Bhd chairman Datuk Seri Nazir Razak has emerged as the frontrunner to be Bank Pembangunan Malaysia Bhd’s new chairman.
Sources said Datuk Zaiton Mohd Hassan had seen off her twoyear contract as chairperson last month, with the Finance Ministry and Bank Negara Malaysia still deciding on her replacement.
“Changes are afoot at Bank Pembangunan as Zaiton’s tenure ended last month. A successor is imminent as the government is pushing again for the merger of the country’s development financial institutions (DFIs),” said a source.
He added that the ministry was receptive to Nazir’s appointment, although Bank Negara wanted Zaiton to stay as the chairperson.
The sources also said Nazir could also play a big part in the creation of a super DFI arising from the merger of Bank Pembangunan, Danajamin Nasional Bhd, Export-Import Bank of Malaysia Bhd (Exim Bank) and SME Bank.
When contacted, Bank Pembangunan confirmed that Zaiton had retired from the board after having served her term last month.
Nazir was not immediately available for comment.
Sunway University Business School of Economics Professor Dr Yeah Kim Leng said DFIs had evolved and carved specific niches in the country’s well-developed banking and financial ecosystem.
“DFIs’ roles and functions are, however, continuously under threat by commercial and investment banking conglomerates, many of which are governmentlinked companies (GLCs),” he told the New Straits Times.
Unless these DFIs could offer cost advantages and unique lending expertise and skills to sectors less coveted by commercial banks, their role and relevance would continue to diminish, Yeah added.
“It is important to undertake periodic review of their (DFIs’) existence, specifically with the view of consolidating their small capital base to compete more effectively with commercial banks and to undertake the more challenging
developmental role.”
Yeah said the post-Covid-19 pandemic restructuring presented a good opportunity to review and reorientate the DFIs’ roles towards rural development, poverty alleviation and social financing, with a focus on the vulnerable segments of the population.
“Financing such activities are typically more challenging and usually avoided by the commercial banks due to the high inherent risk and social nature.
“DFIs with financial backing from the government are better placed to provide such socially oriented finance,” Yeah added.
Malaysian Rating Corp Bhd senior economist and head of research Firdaos Rosli said a merger of DFIs would be good amid
the high non-performing loans and corporate governance issues currently.
“Bank Negara has issued a draft for enhancing corporate guarantee requirements for DFIs, including no active politicians on the boards of directors.”
Firdaos said a merger could improve the DFI sector’s economies of scale and efficiency.
The rating agency said it was neutral on the merger proposal for now.
DFIs are specialised financial institutions established with specific mandate to develop and promote key sectors that are considered of strategic importance to the overall socio-economic development objectives of the country.