Grab vies for AmBank despite tricky nature of deal

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Grab’s offline-online strategy is back in vogue after the ride-hailing giant was said to be negotiating a majority stake in AMMB Holdings (AmBank), Malaysia’s fourth-largest bank by assets.

Grab is looking to acquire the stakes of AmBank’s two largest shareholders: the Australia and New Zealand Banking Group (ANZ) and Azman Hashim, the Malaysian bank’s former chairperson. ANZ owns a 21.68% stake in the bank while Azman, a veteran banker who led AmBank from 1982 to January 2022, holds 11.83%.

The last time we read about this potential acquisition was when Grab bought Malaysian grocery chain Jaya Grocer early this year.

However, there are two differences this time: First, the AmBank acquisition hasn’t been confirmed. Grab didn’t comment when we asked to verify the news. Second, AmBank is a traditional institution, meaning it is tightly regulated by Bank Negara Malaysia (BNM), which makes this possible purchase even trickier.

Now, Grab, together with Singtel, has snagged a digital banking license in the country. And what’s interesting here is that BNM has liberalized the space, allowing foreign entities to hold a majority stake in and ultimately own a digital bank.

According to BNM, three out of the five license winners are Malaysian-owned in that Malaysian entities hold a majority stake in their respective consortia. Grab-Singtel is considered foreign despite having Kuok Brothers, controlled by Malaysian tycoon Robert Kuok, as a partner.

All these digital banks need to do moving forward is adhere to the central bank’s guidelines and cross the required hurdles as agreed by all stakeholders.

These are all well and good. But, owning an incumbent like AmBank is a different ball game. BNM wields huge clout over who sits on the boards of these banks, and it also determines who can own a substantial stake in them.

These laws came into effect after the 1997-1998 Asian financial crisis when BNM mandated mergers between a handful of large-cap banks in the country.

AmBank is a good example of these laws taking effect. Back in 2017, US-based private equity firm TPG Newbridge was reported to be negotiating with then AmBank chairperson Azman to purchase ANZ’s stake in the bank.

However, BNM did not green light the deal because the move went against the central bank’s policy of not having a private equity firm as a substantial shareholder of a bank. So it’s clear that banks can’t simply sell their strategic stake to the highest bidder.

Also, legislation dictates that no individual is allowed to hold more than a 10% interest in shares in any local financial institution.

Now here’s the fun part: There’s a so-called grandfather rule in the banking scene that only allows three seasoned bankers in the country to own more than 10% in their respective banks. In AmBank’s case, these bankers would be Azman, Quek Leng Chan of Hong Leong Financial Group, and Public Bank’s Teh Hong Piow.

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