[ Laman Ehwal Semasa ReformIS ]
Date: 22 Aug 1999
Time: 10:26:03
Remote User: -
Malaysian opposition attacks forced bank mergers
KUALA LUMPUR, Aug 22 (AFP) - A four-party opposition alliance said Sunday it will abandon the government's planned forced bank mergers if it secures a mandate from voters at forthcoming elections. "The alternative parties categorically reject the National Front government's recent bank merger proposal, and will abandon the scheme if it secures a mandate from the Malaysian electorate," the alliance said in a statement.
The alliance described the forced mergers as ill-conceived and blasted the government's non-consultative and authoritarian approach to the matter.
"The six bigger banks envisaged have been seemingly arbitrarily dictated by the authorities," it said.
"Considering some of the groupings and lead banks envisaged, at least some of the forced mergers are likely to fail, thus worsening the Malaysian financials' already weakened condition."
In July the central Bank Negara announced plans to consolidate dozens of financial institutions into six groups, each based on a core bank and comprising a commercial bank, a merchant bank and a finance company.
All banks will have to sign memoranda of understanding by the end of September under the plan designed to consolidate Malaysia's troubled financial sector.
The alliance is comprised of the National Justice Party led by Wan Azizah Wan Ismail, wife of jailed former deputy premier Anwar Ibrahim, Parti Islam Semalaysia, the Democratic Action Party and the People's Party of Malaysia.
They have formed a pact to topple the ruling coalition led by Premier Mahathir Mohamad at the country's 10th general election expected to be called in the next few months as the economy recovers from recession.
The central bank has denied the plan is "politically motivated" but some analysts say investors are bound to see a political element because businessmen considered too close to Anwar will be removed.
The six core banks will be Malayan Banking Bhd., Affin Holdings Bhd., Multi-Purpose Bank Bhd., Public Bank Bhd., Commerce Asset-Holding Bhd. and Southern Bank Bhd.
The alliance said it favoured a tiered banking system in which different sized banks would co-exist and compliment one another.
"There is no evidence that the larger banks will be better able to deal with the challenges ahead ... especially since the banks will still be puny by international standards," it said.
The alliance said there was widespread suspicion of the proposal due to its forced pace and coercive nature.
"Financial sector employees, who have taken the brunt of the recent financial crisis are likely to suffer further from massive lay-offs and reduced pay," it said.
A union representing Malaysia's 70,000 bank employees on Tuesday raised fears about their future under the scheme.
But Mahathir has defended the plan as necessary to allow local banks to compete with foreign institutions.