Bank Pembangunan, Danajamin gets BNM’s green light to start merger talks

Negotiations between BPMB and Danajamin are expected to be completed within 6 months from BNM’s approval

by ASILA JALIL/ graphic by MZUKRI

BANK Negara Malaysia (BNM) has approved Bank Pembangunan Malaysia Bhd (BPMB) and Danajamin Nasional Bhd to commence negotiations under the first phase of the government’s proposal to merge four Malaysian developmental financial institutions (DFIs).

During the tabling of Budget 2020, Finance Minister Lim Guan Eng said BNM is proposing a two-phase restructuring plan to strengthen the country’s development finance ecosystem.

“The merger is expected to lead to greater synergies to achieve development outcomes that would benefit all stakeholders, as well as fulfil the needs of the new economy,” BPMB said in a statement yesterday.

It said negotiations between BPMB and Danajamin are expected to be completed within six months from BNM’s approval to commence negotiations.

The restructuring plan will be implemented in two phases — the first phase involving the merger of BPMB with Danajamin and the second phase is the merger of Small Medium Enterprise Development Bank Malaysia Bhd and the Export-Import Bank of Malaysia Bhd.

A steering committee led by the Ministry of Finance will oversee the overall implementation of the restructuring plan. The committee consists of representatives from relevant stakeholder ministries including the Economic Affairs Ministry, Entrepreneur Development Ministry, International Trade and Industry Ministry, Credit Guarantee Corp, BNM and the four DFIs.

“A working committee has also been established to support the steering committee in driving the implementation of the key integration aspects of the merger.

“The working committee will also provide updates to the public as and when appropriate with regards to the progress of the merger,” said BPMB.

Based on the banks’ 2018 annual reports, BPMB had a total asset of RM24.73 billion while Danajamin’s asset stood at RM2.75 billion as at end-2018.

“With a combined asset value of RM24.7 billion (as at Dec 31, 2018), the BPMB group is wellpositioned to meet the financing and business development needs of Malaysian businesses in the priority sectors,” added BPMB.

BPMB was incorporated on Nov 28, 1973.

Today, it is mandated to provide medium- to long-term financing to the strategic sectors of the economy.

BPMB also provides financing to small and medium enterprises involved in manufacturing, construction, supply, transportation, agriculture, hospitality and information technology through its wholly owned subsidiary, Pembangunan Leasing Corp Sdn Bhd.

For the financial year ended Dec 31, 2018, BPMB posted a net profit of RM167.31 million.

Danajamin was established in May 2009 to be a financial guarantor and a catalyst to stimulate and further develop the Malaysian bond/sukuk market.

Danajamin registered a net profit of RM119.2 million for the financial year ended Dec 31, 2018.

Based on its 2018 annual report, Danajamin issued a guarantee amount totalling to RM9.91 billion.