Categories: BusinessNews

Public Bank could see emergence of a new major shareholder, says CGS-CIMB Securities

by SHAFIQQUL ALIFF

THE passing of Public Bank Bhd’s founder and chairman emeritus Tan Sri Dr Teh Hong Piow is not expected to materially affect the outlook and strategic direction of the bank but it could lead to a material change to its shareholding structure.

“His demise would lead to a material change in the shareholding structure of Public Bank with the potential emergence of new major shareholders,” CGS-CIMB Securities Sdn Bhd (CGS-CIMB Research) said in a recent report.

“However, we do not have any knowledge of the arrangement by the late Teh for these shares. The possibility of M&As for Public Bank in the future depends on the plans by the person(s) who will inherit these stakes, in our view,” it said.

CGS-CIMB Research said the late Teh was the largest shareholder of Public Bank with a 23.41% stake (or 4.54 billion shares) as at March 14, 2022.

Based on the closing price of RM4.40 for Public Bank on Dec 12, Teh’s stake carries a total value of RM20 billion.

The research firm highlighted that according to Section 92 of the Financial Services Act, individuals are prohibited from owning more than a 10% stake in a financial institution unless they already held the stake before June 30, 2013.

“As such, for the individual(s) who will inherit Teh’s stake in Public Bank, he/she (they) cannot hold more than 10% stake per person,” it said.

However, CGS-CIMB Research noted that Public Bank is backed by a strong and experienced management team, which includes its MD/CEO Tan Sri Dr Tay Ah Lek, deputy CEO Datuk Chang Kat Kiam and senior COO Chang Siew Yen.

In fact, it noted that Public Bank initiated its succession plan years ago when Teh relinquished his CEO position and was redesignated non-executive chairman of Public Bank on July 1, 2002.

However, the research house said news of Teh’s demise could have a near-term knee-jerk effect on Public Banks’ share price but there will be a limited impact on its near-term earnings outlook.

“As such, we reiterate our ‘Add’ call on the stock premised on the potential rerating catalyst from it having one of the lowest credit costs among its peers should the economic environment deteriorate in 2023 and from potential write-back in management overlay.

 “We maintain our financial year 2022-2024 earning per share forecasts and dividend discount model-based (DDM) target price of RM5.20 for the bank,” it said.

Teh passed away peacefully at 10.20am yesterday at the age of 92. Born in Singapore on March 14, 1930, he attended his formal primary and secondary education at the Anglo-Chinese School in Singapore.

He began his banking career in 1950 and had 72 years of experience in the banking and finance industry.

He was made CEO and MD of the bank when it started business in August 1966. Its first branch was located at Jalan Gereja in Kuala Lumpur, and the bank was listed on the Kuala Lumpur Stock Exchange (now Bursa Malaysia) in April 1967.

Teh later stepped down as CEO and was appointed non-executive chairman in July 2002 and retired in December 2018 and was conferred the title of chairman emeritus and advisor of Public Bank in January 2019, and remained as a non-ED of the bank.

Dayang Norazhar

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