RHB Bank injects additional rm8.6mil into Boost

PETALING JAYA: RHB Bank Bhd has subscribed for an additional 8.6 million ordinary shares in Boost Bank for a cash consideration of Rm8.6mil, maintaining its 40% equity interest in the digital bank.

This comes as Boost Holdings Sdn Bhd (BHSB), an indirect subsidiary of Axiata Group Bhd, also subscribed for an additional 12.9 million new Boost Bank shares on Jan 16, 2024 for a cash consideration of Rm12.9mil.

Pursuant to a shareholder agreement dated March 31, 2023, RHB Bank and BHSB hold 40% and 60% of equity share capital in the digital bank, respectively.

According RHB’S filing with Bursa Malaysia, the purchase of additional shares by both parties was to fund Boost Bank’s operating and capital expenditure for the first half of 2024 (1H24), as well as to continue meeting the minimum capital funds requirement by Bank Negara.

Upon completion of the additional subscriptions, the paid-up capital of Boost Bank will be Rm206.5mil, comprising 206.5 million Boost Bank shares.

The extra subscriptions are anticipated to have no major impact on RHB Banking Group’s net asset, gearing, and earnings for the fiscal year ending Dec 31, 2024, nor on the issued share capital or shareholder holdings in RHB Bank.

The Boost-rhb digital bank consortium was among the five successful licence applicants announced by Bank Negara in April 2022.

Boost Bank received the official greenlight from Bank Negara and the Finance Ministry to commence its operations as a digital bank effective Jan 15, 2024, making it the first primarily Malaysian-owned digital bank in the market.

In a recent joint statement, Boost and RHB Bank said the consortium will advance into the alpha-testing phase involving internal employees, family, friends and a selected group of customers.

“The digital bank will progressively enhance its product propositions and refine the user experience to pave the way for a new era of embedded finance tailored to meet the diverse needs of all Malaysians,” the parties said.

Through the alpha-testing phase, the digital bank hopes to improve user experience and strengthen its offerings.

Analysts believe that the digital bank will open new avenues for RHB Bank.

However, no significant near-term contributions to RHB Bank should be expected as other traditional financial institutions are also bolstering their digital skills and offers, and fierce competition can be expected during the gestation period.