The Arab-Malaysian banking group will be the largest recipient, getting 1.7 billion ringgit in capital, the New Straits Times said, quoting deputy finance minister Wong See Wah at parliament.

Wong was quoted as saying Arab Malaysian Bank would receive 800 million ringgit, Arab Malaysian Finance Bhd 500 million and Arab Malaysian Merchant Bank Bhd 400 million.

Rashid Hussain's merged RHB Bank/Sime Bank will get 1.5 billion ringgit, the second-largest recipient of Danamodal's funds, the newspapers said.

Other banks benefitting from Danamodal will be BSN Commercial Bank, Oriental Bank, United Merchant Finance Bhd, and Sabah Bank, newspapers said.

Wong was quoted as saying the government agency set up to absorb non-performing bank loans, Pengurusan Danaharta Nasional Bhd, needs funds totalling 15 billionringgit, of which 1.5 billion ringgit will come from the government in the form of equity.

The rest will be raised through bank loans and bond issues by Danaharta to local financial institutions, the New Straits Times said.

Danamodal's 11 billion ringgit, five-year zero coupon bond debuted earlier this month at a yield of 7.25 per cent. The private placement of the bonds by Danamodal was fully subscribed by 57 financial institutions in the country.