KUALA LUMPUR: Local parties are not rushing to sell down their equities in standalone investment banks (IBs) even if foreign parties are expressing interest in acquiring stakes in them after the foreign shareholding cap was recently increased to 70%, ECM Libra Financial Group Bhd chairman Datuk Seri Kalimullah Hassan said.
“There is no eagerness to sell unless it can be shown that you can boost profit. Last year, some would have been keen to sell because things were bad. Now with business coming back, if we’re going to earn good money for our shareholders, why sell the goose that lays the golden egg?
“For example, I’m earning RM30 million now, but you can bring in RM300 million, I sell to you 70% but my 30% is RM90 million. There’ll be those considerations. I don’t think people are rushing to sell,” Kalimullah told reporters after the company’s AGM yesterday.
Nonetheless, he said interest had been shown in some of the standalone IBs by foreign parties after the cap was increased, though he did not say if ECM Libra was one of them.
“In the past, they (foreign investors) always wanted control of at least 51% but then the foreign shareholding allowed was capped at 49%. Now that it’s 70%, it has become more attractive to them,” he added.
On some of the possible reasons foreign banks were looking to come in, Kalimullah said they might want their presence in the country to complete their regional circle.
“There are a lot of foreign banks doing major deals in Malaysia and they are doing it out of Singapore and Hong Kong but the deals are big enough to justify a presence here,” he said.
“There are still quite a few major regional and financial institutions which want a footprint in Malaysia. Even last year when things were bad, there were people who were looking for IBs or commercial banks in Malaysia. Now that things are improving, there is certainly greater interest shown,” he said. Kalimullah said the liberalisation in the financial sector was good for the country.
“If we look at what would be a fair target, it would have to be a standalone IB; that’ll be the cheapest entry point. For small standalone banks, it’s also good to get a foreign party to come in where they can provide you with their expertise and put their balance sheet on the table where you can do larger deals and underwriting,” he added.
Moving forward, Kalimullah said ECM Libra would continue to focus on its niche and remain careful. “We’ll not go into risky businesses,” he said.
He said 2009 had seen a promising start with brokerage income up almost threefold.
“We are now beginning to see interest in people doing deals again. We are quite confident that, if all things are unchanged, we’ll do very well this year compared to the previous year. Much better this year,” he said.
Kalimullah added that ECM Libra was also looking at doubling its current remisier base of 200 in the next two years to build economies of scale and also to increase its asset base through deposit-taking.
“We don’t want to kid ourselves. We are small. There is no way we are going to compete with the bigger bank-backed IBs. The bulk of the deals as far as this country is concerned, 80% to 90% goes to the top five bank-backed IBs.
“So we have to look at niche. That is how we have been surviving. We are looking at setting up property fund. Doing private equity. With the talent that we have and are acquiring now, we can excel. Those are the areas that we are looking at,” he said |
