Malaysia's Southern Bank is resisting a takeover attempt from state-controlled financial services group Bumiputra-Commerce Holdings and appealing for other offers.
The Malaysian government is keen for lenders to consolidate before liberalization next year so banks can compete with global groups such as HSBC and Citigroup. However, takeover talks broke down as Southern Bank claimed the $1.7 billion bid undervalued the bank, which focuses on wealthy clients and loans to small businesses.
The Financial Times has suggested that the Southern chief executive Tan Teong Hean rejected the offer because the bank would prefer a bank tied to the ethnic Chinese community as a partner over a bank representing Malay interests. The newspaper estimated that Southern has a market value of $1.6 billion, based on its latest share price.
Major shareholders such as Sharafuddin Idris Shah, the Sultan of central Selangor state and former Southern Chairman Syed Mohd Yusof Syed Nasir, are believed to be supportive of the merger.