MBSB-AFB merger to be completed by end-March

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) expects to complete its proposed merger with Asian Finance Bank Bhd (AFB) by end-March, president and chief executive Datuk Seri Ahmad Zaini Othman said.

He said more than three quarter of the integration process had been completed.

“The merger will result in MBSB becoming the financial holding company of AFB and with a new name for the merged entity,” Ahmad Zaini said at a briefing after the company’s EGM.

Under the merger exercise, MBSB would acquire AFB in a RM 644.95mil deal that would give the non-bank lender a licence to become a full-fledged Islamic bank.

The acquisition will be settled via cash and issuance of new shares. The vendors for the deal consist of Qatar Islamic Bank, Financial Assets Bahrain W.L.L, RUSD Investment Bank Inc and Tadhamon International Islamic Bank.

All of MBSB’s syariah-compliant assets and liabilities will be transferred to AFB in tranches. “To date, everything has been on track and we will be able to conclude the share purchase agreement very soon.

“We believe the proposed merger will spearhead growth and provide MBSB with a competitive edge in the financial industry,” he noted.

As for the likelihood of further impairments after seeing MBSB’s earnings being dragged down by impairments for the last couple of years, he said 2017 would be the final year for its impairment programme.

Ahmad Zaini said he did not foresee major impairments apart from the normal provisioning under the new accounting standard MFRS 9, which would come into play in April.

On another note, he said that post-integration, there would not be any layoffs or any form of separation schemes although there could be one or two positions that may be affected at the management level.

“In terms of fitting the manpower in the merged entity, we have hired a human resource consultant to see the best fit, especially at the management level.

“As for others, we will cross-engage them at their respective units. We hope to complete this exercise by March,’’ he noted.

As for expansion, Ahmad Zaini said MBSB was looking at maximising it existing bank branches and possible relocation of some branches post-merger. It now has 44 branches nationwide.