Maybank fundraising not for M&As

KUALA LUMPUR: Malayan Banking Bhd (Maybank), which has announced its intention for a fundraising exercise, is undertaking a multi-currency programme to support lending activities in US dollar and not to embark on any merger and acquisition (M&A) exercise.
Maybank group president and CEO Datuk Abdul Farid Alias said as a financial institution with a global presence, it lends non-local currency denomination (currencies other than the ringgit, Singapore dollar, rupiah and pesos), specifically the US dollar, to clients that have been venturing outside the country and all around the region.
"It's a multi-currency facility. It's got nothing to do with any plans for M&A," Farid told a press conference after Maybank's AGM here yesterday.
Historically, he said Maybank has relied on its limited deposits in US dollars and the interbank market, which is not a good way to manage its exposure.
"Because we're not a natural US dollar deposit-taking institution, we don't have natural US dollar depositors in this country or around this region, the most prudent way to manage this is to have a proper medium term funding strategy.
"We want to make sure that on the asset liability side, when we lend out US dollar, we have a corresponding liability to support that and to purely rely on the interbank market is not a prudent risk management. You must have the interbank market, deposit and medium term funds," said Farid.
He said medium term funds are typically more expensive than deposits but it is the right practice for any institution to have. In addition, this is also in line with its policy of allocating 30% to 50% from medium term funds, similar to other institutions.
Group CFO Mohamed Rafique Merican Mohamed Wahiduddin Merican said it is a US$5 billion programme and Maybank has tapped on this medium term note over the last few years.
"We've met with potential investors but we also need to assess in terms of the level of demand. It has a bearing on pricing. It's still currently being negotiated," said Rafique, adding that that it is a multi-year programme that can be issued in different tenures like three years, five years or longer.
Maybank had on Monday announced the fundraising exercise intended for "working capital, general banking and other corporate purposes in a foreign country". It attached comprehensive special-purpose audited financial statements for the three financial years ended Dec 31, 2014, 2013 and 2012.
In a press release yesterday, Moody's Investors Service said Maybank is planning to issue Samurai bonds and has assigned an A3 rating.
"The rating outlook is positive," said Moody's, adding that the exact amount, tenor and coupon of the bonds are yet to be determined by Maybank.
Meanwhile, Farid said Maybank's liquidity coverage ratio (LCR) is well above the requirements set by Bank Negara Malaysia (BNM) and does need to raise funds to meet that requirement.
BNM has issued its LCR framework as per Basel 3 requirements, which calls on banks to maintain stock of high quality liquid assets to buffer an acute liquidity stress scenario over a 30-day period. The minimum stepup LCR requirement is 30% by June 2015, 70% by January 2016 and 100% by January 2019.
Maybank will also open a new branch in Kunming, in the Yunnan province in China this week, which is its fourth branch in the Greater China region, after Hong Kong, Shanghai and Beijing.