First you witnessed the National Front (Barisan Nasional) coalition’s monopoly broken to pieces after the people who got sick and tired of the arrogant and incompetent administration sent in their protest votes. Still in confusion and disarray after the defeat, it appears the government which is on the brink of collapse anytime now is busy channeling all their energies into the dollars and cents out of the existing account instead of re-engineering the coalition’s strategy to ensure its relevancy.

Provided what former Deputy Prime Minister and architect who led the opposition parties of PKR-DAP-PAS to their sweetest victory since 1957’s independence said about forming the new government within 2008 is real, the top guns within the National Front are scrambling to do the necessary about their wealth. Besides looting and transferring trucks of confidential files to secretive locations minutes after realizing they have lost five states to the opposition including three of the wealthiest, the wives of the once thought to be invincible were equally anxious in transferring funds out from the associations.

Corporate level-wise everyone was puzzled that the country’s largest lender, Malayan Banking Berhad (KLSE: MAYBANK, stock-code 1155), suddenly awaken and went on shopping spree. Analysts’ jaw dropped to the floor when Maybank paid the hefty $2.7 billion for Indonesian PT Bank Internasional Indonesia (JAK: BNII) – 4.6 times book value when the Indonesian banks only commands the average book value of 3.8. It didn’t take the investors long before dumping the stocks. By now, every Tom, Dick and your dog know Maybank might have actually overpaid RM3 billion and some brokers could be still laughing in their sleeps till now. But I guess Maybank shareholders won’t care because they thought the largest banking institution will not goes bust.

Less than two months after the BII purchase, Maybank decided to pour another $686 million for a 15 percent stake in Pakistan’s largest lender MCB Bank (KAR: MCB) betting on a bright economic future despite its recent political turbulence. Government-controlled Maybank is forking 44.29 billion rupees, or 470 rupees per share – 11 percent premium to the stock’s last traded price. However based on the offer price which translates into book value of 5.13 times, this is definitely another pricey acquisition. Get ready for the stock to be bashed when the counter reopens after suspended since last Friday.

Maybank Chief Executive Abdul Wahid Omar said the bank was seeking to raise capital to help restore its capital ratios following the shopping spree. Right, just propose rights issue and get all the shareholders to pump in more money. After all the shareholders are just as blur, so it would be a smooth sailing. Maybe it can issue some debt papers such as sukuk Islamid securities to raise billions of dollars. While Maybank should expand regionally to off-set the domestic slow growth, it shouldn’t just buy for the sake of buying.

Has the top management negotiated for the best deal with the objective to maximize shareholders’ interest? Is this the right timing to buy so crazily, the third after Indonesian BII and Vietnam’s An Binh Bank? Don’t tell me there’s nothing to puzzle with three major acquisitions within a span of only two-months. Yeah, right, suddenly all the regional banks are so attractive and worth buying. Can you smell something fishy with all these acquisitions?

Other Articles That May Interest You …

• Hanky-Panky in Maybank-BII deal? How about MAS?
• Maybank’s stock punished after $2.7 billion BII purchase

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May 5th, 2008 by financetwitter

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