KUALA LUMPUR: DBS Group Holdings Ltd’s plans to acquire a significant stake in Alliance Bank Malaysia Bhd have hit a roadblock, with the deal facing delays due to a lack of regulatory approval, Bloomberg reported, citing people familiar with the matter.
Both DBS, Singapore’s largest bank, and Vertical Theme Sdn Bhd, Alliance Bank’s major shareholder, submitted separate requests to Bank Negara Malaysia (BNM) about eight months ago. However, no response has been issued so far, the sources said.
Regulatory hurdles
Under Malaysian law, central bank approval is mandatory before takeover discussions can proceed. This requirement has left the proposed deal in limbo.
The acquisition would allow DBS to establish a stronger retail banking foothold in Malaysia, where its Singaporean peers, OCBC and UOB, already have a substantial presence. The move aligns with DBS’ wider Southeast Asia growth strategy, aimed at expanding its consumer banking franchise beyond its home market.
In January, Bloomberg reported that Vertical Theme, a holding company backed by Singapore’s sovereign investor Temasek Holdings, was exploring the sale of its 29% stake in Alliance Bank to DBS.
Should the transaction be approved, DBS could pursue an increase in ownership to as much as 49% through a voluntary partial general offer, according to the sources.
Foreign ownership cap in spotlight
Currently, foreign ownership in Malaysian commercial banks is capped at 30%. However, industry chatter suggests potential relaxation of these rules in select sectors.
One source noted that if DBS fails to obtain approval for up to a 49% stake, “the deal is unlikely to advance.”
For now, discussions remain ongoing and no final decisions have been reached.
Silence from stakeholders
Representatives from DBS and the backers of Vertical Theme declined to comment, while Alliance Bank stated it was unaware of the situation.
Meanwhile, Bank Negara Malaysia reiterated its long-standing stance of not commenting on individual applications or shareholding changes in regulated entities, citing policy reasons.
The regulator emphasised that any applications related to licensed banks, including those involving foreign entities, are assessed in accordance with the Financial Services Act 2013 and the Islamic Financial Services Act 2013.
Outlook
If successful, the deal would mark a milestone for DBS as it seeks to deepen its footprint in Malaysia, a market with high retail potential and intense competition. But without a regulatory green light, the acquisition remains stalled, underscoring the weight of BNM’s role in shaping foreign participation in Malaysia’s banking sector.
