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Media Statement

by Lim Kit Siang  
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(Parliament, Friday): Bank Negara is not above the principles and concepts of good governance, and this is why it must be accountable and transparent and should explain the reason why it has vetoed Southern Bank Bhd�s (SBB) RM2.7 billion proposal to buy Singapore insurer Asia General Holdings Ltd. (AGHL).

It has been reported that Bank Negara�s decision will make it easier for rival Bumiputra-Commerce Holdings Bhd (BCHB) to merge its investment bank CIMB Bhd. with  SBB, which is being resisted by the SSB chief executive and substantial shareolder Tan Teong Hean.

In the fight for takeover of SBB by CIMB, which is a  GLC ( government-linked company) with substantial government interest through Khazanah and other government agencies, it is important that Bank Negara should not only  act fairly and transparently  but be seen to be fair and transparent so that no charges could be levelled against the Finance Ministry for interfering by using its considerable  powers and influence to assist one party in a bank takeover fight, or even more serious, of a government conflict of interest in being both  regulator and player at the same time  in the fight for control of SBB.

There are analysts who view the AGHL buy by SBB favourably, arguing that it will ultimately enhance shareholder value; gives the bank what it currently lacks, an insurance arm, which will enable the group to become a �financial supermarket� and to  become a leader in the wealth management segment.

There are also analysts who are not convinced that it�s a good idea for SBB to buy AGHL, on the ground that it will be culturally tough for SBB to fit into the insurance business.

Whatever the pros and cons, the Bank Negara should not second-guess entrepreneurs as to what is the desirable deal in a free market competition, and even more important, should not  be involved in any conflict-of-interest in  being regulator and player for the same deal.

(09/12/2005)