DBS said to revise Alliance Bank offer proposal to 30% stake

It made the decision after failing to get approval for its initial request to buy as much as 49%

Singapore’s biggest bank has withdrawn an application to start talks to buy as much as 49 per cent of Alliance Bank Malaysia, replacing it with one to acquire up to 30 per cent instead, people with knowledge of the matter said.

DBS Group Holdings made the decision after failing to get approval from the Malaysian central bank for its initial request, which would’ve required a waiver because generally a company can only buy as much as 30 per cent of a financial institution in the country, the people said.

The revised request should have a better chance of being approved by Bank Negara Malaysia, the people said, asking not to be identified because the information is private.

That would pave the way for DBS to engage with Alliance’s largest shareholder, Vertical Theme, a Malaysian holding company backed by Singapore state investor Temasek Holdings, the people said. Temasek has a 49 per cent stake in Vertical Theme via Duxton Investment & Development. It also holds about 28.3 per cent of DBS.

Representatives for DBS and Vertical Theme declined to comment. A spokesperson for Alliance said the company wasn’t aware of the matter, while the Malaysian central bank didn’t immediately respond to a request for comment.

An Alliance deal would give DBS a footprint in Malaysia, where Singaporean rivals Oversea-Chinese Banking Corp and United Overseas Bank already have a presence. DBS is South-east Asia’s largest bank by total assets.

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Alliance’s shares have fallen 6 per cent in Kuala Lumpur this year, while the city’s main benchmark is down less than 2 per cent. Alliance has a market capitalisation of about US$1.9 billion. BLOOMBERG

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