[ Laman Ehwal Semasa ReformIS ]

Bank merger plan angers Chinese

Date: 23 Aug 1999
Time: 08:40:42
Remote User: -

Comments

Bank merger plan angers Chinese

Many are wondering why Mahathir would risk alienating Chinese voters ahead of expected elections

KUALA LUMPUR -- An aggressive plan to merge Malaysia's banks has given Prime Minister Datuk Seri Dr Mahathir Mohamad an unexpected political headache by infuriating a pivotal electoral faction -- the ethnic Chinese.

Try as it might, the government has been unable to an end to talk that the plan to combine 58 financial institutions into six would hit ethnic Chinese interests and favour the Muslim Malay majority.

The merger plan has bankers, politicians and diplomats scratching their heads, wondering why Dr Mahathir, not known for political bloopers, would risk alienating Chinese voters ahead of elections expected at any time.

"A lot of Chinese are very angry," said University of Malaya professor Jomo Sundram. "I think the guys behind it did not quite think of the political implications. I don't think this is malicious. It just shows insensitivity."

Few quibble with the argument that Malaysia is over-banked, as the central bank Bank Negara puts it, with 2,712 branches.

The government has leapt on an alliance linking Japan's Dai-Ichi Kangyo Band Ltd, Fuji Bank Ltd and Industrial Bank of Japan as proof that the merger plan must go forward.

the financial institutions have been directed to sign memorandums of understanding before the end of next month -- first step towards formal merger.

What rubbed many Chinese the wrong way was the prospect of seeing the crown jewels among Chinese banks -- Hong Leong Bank and PhileoAllied Bank among them -- gobbled up by institutions run by Malays.

Not to mention the widespread conviction, denied by the government, that bankers close to jailed former Finance Minister Anwar Ibrahim would see their empires disappear.

The number of banks controlled by Chinese would fall to two from eight under the plan. a twist that has raised more than a few eyebrows, Multi-Purpose Bank, the smallest among the six proposed core banks with RM7.2 billion (S$3.2 billion) in assets, would swallow three bigger institutions, including newly-merged RHB-Sime Bank, which is eight times larger.

Opposition leader Lim Kit Siang questioned whether the mergers would result in the concentration of banking in the hands of a "few closely-linked to the present powers that be".

Grumblings of discontent have forced Bank Negara to deny that there was a political agenda behind the plan or that Chinese interests would be hurt.

But the fallout appeared to have created a backlash among urban Chinese, said diplomats and analysts.

Dr Mahathir visited China last week in a trip his supporters hoped would please the Chinese in Malaysia. But some said any favourable impact was lost amid controversy over the bank plan.

"Twenty years ago, a trip to China would impress Chinese voters back home," said a newspaper editor. "But that's no longer the case. We don't see any electoral boost from this trip." --Reuters


Last changed: August 23, 1999