DBS Group Holdings Ltd, Singapore’s largest lender, is considering expansion into Malaysia through potential acquisitions of stakes in local banks, including one of the country’s smallest banks by assets, according to two sources.
DBS is reportedly looking into acquiring a 29.1% stake in Alliance Bank Malaysia Bhd, currently held by Singapore state investor Temasek, which is valued at about $460 million, the sources said.
Temasek, which owns a 28.9% stake in DBS, is the bank’s largest shareholder, according to LSEG data.
Another option for DBS includes the purchase of retail banking assets in Malaysia from Kuwait Finance House, valued at over $500 million, which have been put up for sale, one source added.
Discussions are still in the early stages, the sources noted, and any formal acquisition talks would require approval from Bank Negara Malaysia, the country’s central bank.
The sources requested anonymity due to the confidential nature of the discussions.
In response, a DBS spokesperson said, “We do not comment on market rumors and speculation.” Temasek also declined to comment.
Alliance Bank, Malaysia’s second smallest listed bank by total assets, and Bank Negara Malaysia did not respond to requests for comment on Friday after business hours.
Kuwait Finance House confirmed that the sale process for its Malaysian retail banking portfolio was in preliminary stages, with no additional details to share.
Among Singaporean banks, DBS currently lacks a retail banking presence in Malaysia. Its local competitors, Oversea-Chinese Banking Corporation and United Overseas Bank, already operate retail banking businesses in Malaysia.
DBS’s potential move into Malaysia coincides with improving economic prospects in the country, where infrastructure projects and investments are expected to drive credit growth.
In the second quarter, Malaysia’s economy grew by 5.9% year-on-year, marking its fastest pace in 18 months, boosted by rising household spending, exports, and investments. The Malaysian ringgit has also been Southeast Asia’s top-performing currency this year.
DBS has solidified its position as a regional banking leader during the 15-year tenure of outgoing CEO Piyush Gupta, aided by acquisitions that expanded its footprint in China, India, Indonesia, and Taiwan.
In August last year, DBS completed its acquisition of Citigroup’s consumer banking business in Taiwan. Gupta recently mentioned that DBS is seeking “bolt-on acquisitions” to support strategic regional expansion.
Tan Su Shan, currently DBS’ institutional banking head and deputy CEO, will take over from Gupta in March next year, becoming the bank’s first female CEO. On Thursday, DBS reported its highest-ever quarterly net profit for July to September, driven by record fee income.
In 2012, DBS made a previous attempt to acquire Temasek’s stake in Alliance Bank, but regulatory challenges prevented the deal from proceeding, sources said at the time.
The current Malaysian government, led by Prime Minister Anwar Ibrahim, is reportedly more receptive to investments and proposals that could help spur economic growth, according to the sources familiar with DBS’s plans for Malaysia.
