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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

SEPTEMBER 10, 1999 VOL. 25 NO. 36

First Off the Blocks
Bumiputra Commerce sets the pace
By ARJUNA RANAWANA/Kuala Lumpur

    FINANCIAL 500 1999
Renewal
How the Asian Crisis is spawning new banks and recasting the Financial 500

McBank A Japanese bank gets creative

Mandiri Troubling signs that a new bank is not independent

Scandal The Krung Thai fiasco jeopardizes reform

Niche Player Keppel targets the middle and the region

Bounce Back South Korea's financial system continues to reorganize

Giants Creating the world's biggest bank

Weddings Mergers made in heaven?

Ambition Equitable aims to be number one

Internet Banking Managing money via modem

The Foreign Factor Insurers still face closed doors

  THE 500

How the Nations Fared
in the 500


1-50 | 51-100 | 101-150 | 151-200 | 201-250 | 251-300 | 301-350 | 351-400 | 401-450 | 451-500 |

At first glance, the two Malaysian banks would seem to be odd bedfellows. State-owned Bank Bumiputra needed to be bailed out three times as it went about the business of lending to Malay businessmen, part of the decades-old program to improve the economic condition of Malaysia's indigenous population. Commerce Asset-Holding, on the other hand, has a reputation for professional management. But as the government forces mergers that will create just six Malaysian bank groups out of 59 financial institutions by April next year, Bank Bumiputra and Commerce Asset are the first to wed. Bumiputra Commerce - as the new entity is called - is now the country's second-largest bank with a 19% market share, $17 billion in assets and one of the largest branch networks.

Download the complete 1998 Asiaweek Financial 500
The government's ambitious timetable calls for all the merging banks to get approvals from regulatory authorities firmed up by the end of February next year and start functioning in their new incarnations by April 1. While many are unlikely to meet the deadlines, Bumiputra Commerce is ahead of schedule. Commerce Asset signed a share exchange agreement with the government in February this year. Its shareholders, which include the Renong Group and the New Straits Times Press, voted for the merger last month. The government controls one-third of the new company while Fleet Holdings, a company linked to the ruling UMNO party, has 12.5%. Renong, which has ties to Finance Minister Daim Zainuddin, holds 13%. New Straits Times, which has been identified with ousted deputy prime minister Anwar Ibrahim, will sell its 14% stake within the year.

Commerce Asset chief Mohamad Nor Mohamad Yusof has been named CEO. He says surveys show 80% of the staff in the two merging banks are excited about the tie-up and are willing to accept changes. Analysts are cautiously optimistic. Bumiputra Commerce, says one, "will have the depth and reach of Bank Bumiputra with its large number of branches, and the efficient management of Commerce."

Maybe. But the new bank is off to a shaky start. Losses at Bank Bumiputra puts it $242 million in the hole. SG Securities regional economist Neil Saker has another worry. "The rapid pace of bank mergers could be an impediment to the real economy," he says. "The concern is that the banks' boards will focus on managing this process rather than banking activities, such as lending to finance the real sector recovery." Mohamad Nor has told his people they must "continue to focus on our day-to-day business of servicing customers' needs and not become too distracted by the merger." In other words, don't let the wedding spoil the marriage.


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