Maybank to sell consumer NPL portfolio to Standard Chartered Bank & ORIX Leasing Malaysia
Maybank today announced that it has entered into a conditional Sale and Purchase Agreement (SPA) with Standard Chartered Bank (Hong Kong) Limited Alternative Investments and ORIX Leasing Malaysia Berhad for the disposal of a portfolio of long-standing secured consumer non-performing loans (NPLs).
The portfolio comprises 8,375 long outstanding consumer loans with a total face value of about RM1.4 billion (USD422 million). The loans are mainly secured by residential properties located across Malaysia.
The Agreement was reached by way of negotiations following a bid process that was held on 4 December 2007. Maybank awarded the portfolio to the successful bidder after negotiations were satisfactorily concluded recently.
The conditions of the SPA include obtaining approval of the sale from the Minister of Finance and the conduct of a validation process by the buyer after which the final purchase price will be determined. The impact of the sale should be reflected in the Bank's results for the financial year ending 30 June 2008.
Maybank President and CEO Datuk Amirsham A Aziz said today the sale of this NPL portfolio was part of the Bank's continuous effort to complement its various recovery strategies in asset quality management.
He added that this is the second time the Bank had undertaken such an exercise. It has now sold two NPL portfolios divided into three tranches in the past two years.
"The sale of this second tranche is very much in line with our approach to consistently strengthen our asset quality and generating greater value for stakeholders," said Datuk Amirsham. "This agreement marks yet another milestone as it was also concluded through a competitive open bid which attracted significant interest from the market."
Paul Jurie, Global Head of Alternative Investments at Standard Chartered Bank (Hong Kong) Limited said, "This is a very exciting opportunity for us. We have chosen to invest in the Malaysian market as we want to establish ourselves as a significant distressed and hi-yield investor as we have in our other core markets. We intend to acquire more assets over the next 12 months as we are optimistic about the business turnaround situations in Malaysia."
Nirukt Sapru, Managing Director and Country Head Origination and Client Coverage, Standard Chartered Bank Malaysia Berhad said, "We are delighted to foster strong relationships with local banks and continue to be their right partner. The investment will complement the various recovery strategies within Maybank and facilitate the reduction of NPLs.
With an extensive presence of over 130 years in Malaysia, coupled with our international expertise and local knowledge, it is only natural we support the growth of local banks and the development of the financial sector. This is a testimony to Standard Chartered's strength, capability and commitment to Malaysia as well as the region."
This is the second time Standard Chartered Bank has acquired NPLs from Maybank. In Q1 2007, Maybank sold a USD163 million single asset NPL to Standard Chartered Bank.
Lim Beng Chor, Managing Director and Co-Chief Executive Officer of ORIX Leasing Malaysia Berhad said, "Our participation in this transaction represents a significant step in the efforts of ORIX Group in Malaysia to broaden its scope of activities through diversification into areas which our parent, ORIX Corporation has pursued with considerable success in Japan and other parts of the world."
Haruyuki Urata, Director and Deputy President, Responsible for Overseas Activities of ORIX Corporation said, "As a growth strategy going forward, ORIX looks to promote business diversification as well as enhance the profitability of its subsidiaries in Asia and the Middle East including Malaysia, by implementing the business models we have cultivated in Japan and further strengthening our investment banking operations."
With the completion of the acquisition, the Consortium will initiate recovery and collection processes in accordance with local regulations to realise investment value.