[ Laman Ehwal Semasa ReformIS ]

Bank Bumiputra Lenyap

Date: 26 Aug 1999
Time: 11:27:02
Remote User: -

Comments

Malaysia pledges no more bank bailouts in future

KUALA LUMPUR, Aug 26 (AFP) - Malaysia will no longer bail out banks after its merger exercise is complete, Finance Minister Daim Zainuddin said Thursday. The government had bailed out many banks in the 1980s using public funds and set up agencies to recapitalise weak financial institutions and mop up bad debts in the banking sector last year, Daim said.

"The government cannot afford to bail out banks every ten years," he said at an economic function.

Because the government could also not allow banks to fail it decided to merge financial institutions into six core groups to ensure that banks were managed professionally, he added.

"The government decided not to bail out more banks," he said. "If they fail, that's it."

Daim rejected allegations that the government had interfered or influenced the banks in their general operations, noting that some banks were still not lending despite persistent encouragement.

"In reality, we have no influence over the banks," he said.

The banking merger program would result in bigger and more powerful entities which would make it more difficult for the government to interfere, he added.

The central bank last month ordered dozens of financial institutions to merge into six groups, each comprising a core bank and having a commercial bank, a merchant bank and a finance company.

The six core banks are Malayan Banking Bhd., Perwira Affin Bank Bhd., Multi-Purpose Bank Bhd., Public Bank Bhd., Commerce Asset-Holding Bhd. and Southern Bank Bhd.

All financial institutions are to sign memoranda of understanding on the mergers by end-September, with the central bank offering tax incentives worth billions of ringgit to speed up the program.


Last changed: August 26, 1999