Kuala Lumpur, Mar 12: Malaysia's Rashid Hussain Bhd said it had set an agreement to acquire Sime Darby Bhd's troubled Sime Bank Bhd, just a week after saying it had won government approval for merger talks.The financial services group said it had signed a deal with Sime Darby and diversified KUB Malaysia Bhd, the key shareholders of Sime Bank, to buy the bank's share capital for 852.24 million ringgit ($213 million).KUB owns 30.01 per cent of Sime Bank and Sime Darby 60.35 per cent.With the purchase, Sime Bank would be merged with RHB Bank Bhd, a unit of RHB Capital Bhd, it said.
"This acquisition and merger creates the second largest bankin Malaysia," Abdul Rashid Hussain, executive chairman for the entire Rashid group, said.
He said the purchase price of 852.24 million ringgit was reached based on Sime Bank's group net tangible asset at December 31, 1997 of 588.9 million ringgit adjusted for surpluses from the disposal of certain subsidiaries.
The subsidiaries being disposed of included Sime Merchant Bankers Bhd, SimeSecurities Holdings Sdn Bhd, Sime Finance Bhd, Simeban Harta Sdn Bhd, UMBC Insurans Sdn Bhd and Sime International Bank (L) Ltd and would go "to certain parties identified by Bank Negara Malaysia".
Rashid's statement did not identify the parties.
"The disposal price includes premium for various licenses of the above financial subsidiaries," it said.
Rashid said it would unveil details of the funding for the acquisition and recapitalisation of Sime Bank by the end of next week.
News of the agreement came exactly a week after Rashid, whose businesses include stockbroking and banking, said it had received approval from central Bank Negara to proceed with merger talks on Sime Bank.
Sime was revealed as one of four financial institutions in Malaysia needing fresh liquidity.
The Sime Darby unit, Malaysia's fifth largest bank, posted a pre-tax loss of 1.81 billion ringgit for the half-year to end-December, and needs fresh capital of 1.2 billion ringgit to stay healthy.
Rashid's proposal to acquire Sime Bank was a second try at a banking merger in recent weeks after talks to acquire Commerce Asset Holdings Bhd's bank reached an impasse.
The central bank has been prodding local financial institutions to merge and grow before the opening up of Malaysia's markets by the turn of the century.
The agreement was sewn up just as it appeared the government might be losing patience with the pace of mergers and the sputtering merger talks between Rashid and Commerce Asset, which dissolved in apparent bad humour.
Finance minister Anwar Ibrahim said that the government would allow companies such as Sime Bank to close if no merger partners could be found.
"If there (are) no other private parties willing to take up (Sime Bank) in a merger exercise, we will have to accept...its closure," he said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
