[ Laman Ehwal Semasa ReformIS ]
Date: 08 Aug 1999
Time: 20:14:03
Remote User: -
Malaysia rules out 'hidden motive' behind push for bank mergers
KUALA LUMPUR, Aug 8 (AFP) - Malaysia on Sunday denied any "hidden motive" behind the decision to combine 21 banks into six by the end of September.
Deputy Prime Minister Abdullah Ahmad Badawi was quoted by the official Bernama news agency as saying the bank restructuring program was aimed at strengthening the country's banking system and to enable local banks to compete with foreign ones.
"At this point there is indeed varied speculation and assumptions but the merger move is similar to the actions taken by the government at the initial stages to bring about economic recovery," he added.
"The government wanted to see local banks play a dynamic role which can accelerate development efforts," he said.
A foreign newspaper reported Sunday the move to consolidate the banks was politically motivated to punish the allies of former ousted deputy prime minister Anwar Ibrahim who is currently serving a six year jail sentence.
On Saturday a Malaysian opposition party called for a review of the sweeping banking merger ordered by the central bank to consolidate dozens of financial institutions into six groups.
The Democratic Action Party welcomed the consolidation of the banking industry but voiced concern "strong-armed pressures by Bank Negara Malaysia to create forced marriages might cause more harm than good".
"The proper role of the government is to set rules and regulations for the orderly functioning of the financial institutions rather than be the matchmaker for their mergers," said its secretary-general Lim Kit Siang.
"Bank Negara should concentrate on supervising the financial institutions to prevent them from straying into massive losses," said Lim, who is also the opposition leader.
Bank Negara announced the merger plan last week, saying each of the proposed groups would be based around a commercial bank, a merchant bank and a finance company and that all banks would have to sign memoranda of understanding by the end of September.
Analysts have said the plan appeared unrealistic and that it may lead to new problems such as massive lay-offs and possible lending curbs.
But Prime Minister Mahathir Mohamad defended the plan Friday, saying it was necessary to consolidate local banks to allow them to compete successfully with their foreign counterparts.