DBS Is Said to Revise Alliance Bank Offer Proposal to 30% Stake

(Bloomberg) — Singapore’s largest bank has withdrawn its application to begin talks to buy up to a 49% stake in Alliance Bank Malaysia Bhd., replacing it with a bank that would buy up to a 30% stake, people with knowledge of the matter said.

According to sources, DBS Group Holdings Ltd. made the decision after failing to get approval for its initial request from Malaysia’s central bank; this would require waivers because generally a company could only acquire 30% of a financial institution in the country.

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

Sources said this was DBS’s partnership with Alliance’s largest shareholder, Vertical Theme Sdn., a Malaysian holding company backed by Singapore state investor Temasek Holdings Pte. He said that it would pave the way for him to establish a relationship with. Temasek, Duxton Investment & Development Pte. It owns 49% shares in Vertical Theme. It also holds approximately 28.3% of DBS.

Representatives for DBS and Vertical Theme declined to comment. A spokesman for Alliance said the company was unaware of the matter, and Malaysia’s central bank did not immediately respond to a request for comment.

An alliance agreement gives DBS a share of its Singaporean rivals, Oversea-Chinese Banking Corp. and will provide a footprint in Malaysia, where United Overseas Bank Ltd. already has a presence. DBS is Southeast Asia’s largest bank by total assets.

Alliance’s shares have fallen 6% in Kuala Lumpur this year, while the city’s main gauge has lost less than 2%. Alliance’s market capitalization is approximately 7.7 billion ringgit ($1.9 billion).

–With help from Joyce Koh.

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