Property Hunter Magazine September Issue 2014 | Page 114

/// Banking and Investment News

70% Loan Rejection Rate Among 1st Time Buyers

The tougher mortgage rules
introduced by Bank Negara Malaysia
will continue to negatively affect
first-time home buyers, according to
Datuk Othman Omar, Chief Executive
Officer of Oxley Holdings (M) Sdn Bhd
(OHSB).
During his term as the General
Manager at Selangor State
Development Corp (PKNS), he pointed
out that 70 percent of the housing
loan applications of this group are
rejected as eligibility is now based on
net income rather than gross income
previously.
Unless the central bank changes
its rules on first-timers, this trend is
expected to continue throughout
2014, Othman predicted
“Previously, first-time house buyers
qualify for loans just above the border
but now they do not qualify due to the
loan-to-value ratio and the new credit
assessment guidelines.”
“The ruling punishes the first-time
home buyers seeking affordable
homes more compared to the highend property buyers,” he noted.
As a result, property purchases are
falling and developers are launching
fewer products locally due to BNM’s
existing measures, coupled with the
Improvement Service Fund (ISF) in
Selangor.
Earlier this year, Petaling Jaya Mayor
Datin Paduka Alinah Ahmad, stated
that developers with projects in the
city are required to contribute to the
fund to lessen the impact of their new
projects.

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ISF will be used by the Petaling Jaya
City Council (MBPJ) to upgrade basic
amenities such as roads so that there
will be less traffic at these locations.
To cope with these measures, many
investors are looking at overseas real
estate, especially in Australia and the
United Kingdom, said Othman.
“For properties in London, getting
housing loans is still the main
challenge for Malaysian investors,
however, several local banks like
Malayan Banking Bhd (Maybank) and
CIMB Bank Bhd are offering housing
loans and we see low rejection rate as
most of these investors are high-networth individuals with good credit
records.”
In particular, London’s Royal Wharf
project has seen strong interest
from Malaysians who are keen
on waterfront properties. The
development consists of 3,400
apartments and townhouses, office
space, retail as well as F&B spaces.

Unless the central
bank changes its
rules on firsttimers, this trend is
expected to continue
throughout 2014,
Othman predicted

Maybank Had Toyed With Idea of
Merger With RHB Cap

Malaysia’s largest banking group,
Malayan Banking Bhd (Maybank),
has resigned itself to waiting on the
sidelines after being locked out of
the negotiations for RHB Capital
Bhd and Malaysia Building Society
Bhd (MBSB).

Meanwhile, Reuters reported that
investment banks were rushing
to court Maybank with a range
of merger and acquisition ideas,
convinced that CIMB’s merger
plans will push Malaysia’s top bank
to do a deal of its own.

Sources said Maybank had
expressed its interest to the
authorities on RHB Cap two weeks
ago, but has decided to stay out
of the race for now due to the
exclusivity agreement between the
banks and CIMB Group.

“Everybody is pitching, but
Maybank seems very relaxed to
me,” said a Hong Kong-based
investment banker who has
spoken to Maybank, adding that
it was reluctant to run the risk of
overpaying for a bank just to retain
its No. 1 ranking.

“Some two weeks ago, Maybank’s
senior management had broached
the subject of acquiring RHB Cap.
The idea was even floated at Bank
Negara level,” said a source.
However, last week’s move by CIMB
to start negotiations with RHB Cap
and MBSB with the view of forming
a large commercial bank and
establishing a mega-Islamic bank
has caught Maybank by surprise.
Hence, banking officials said
the Permodalan Nasional Bhdcontrolled bank was off the
negotiations unless the deal did
not happen.
In 2011, Maybank and CIMB were
in neck-and-neck negotiations to
take over RHB Cap. But the price
was not agreeable to the Aabar
Group of Abu Dhabi, which had a
25% stake then.
A transaction was done between
the groups of companies within
the Aabar Group, setting the
benchmark price for RHB Cap at
RM10.80 per share. The Aabar
Group’s interest is now down to
21.43%, and it is said to be seeking
some RM12 per share for its stake.

To bolster its position, Maybank is
likely to weigh buying a domestic
bank such as Public Bank Bhd, the
nation’s No. 3 lender, or smaller
banks such as Alliance Financial
Group Bhd and Bank Islam
Malaysia Bhd, banking sources and
analysts said.
It might also pursue overseas
targets such as Thailand’s TMB
Pcl, a bank that sources said it had
expressed interest in before.
Bankers declined to be identified,
as discussions with Maybank
were private. Asked about
possible acquisitions, a Maybank
spokeswoman declined to
comment.
Public Bank, Bank Islam and
TMB declined to comment too. A
spokeswoman for Alliance was not
available for comment.
Under the proposed merger
between CIMB, RHB Cap and
MBSB, the parties have 90 days
exclusivity to come up with a
proposal to be submitted to Bank
Negara.

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