AmBank to raise RM810mil via private placement to bolster capital

KUALA LUMPUR: AMMB Holdings Bhd (AmBank Group) has proposed a private placement to raise an estimated RM810 million to strengthen its capital.

This follows AmBank’s RM2.83 billion settlement with the government in relation to the 1Malaysia Development Bhd (1MDB) scandal

The placement will lead to the emergence of a new investor in AmBank Group.

The group said it planned to issue up to 300 million new shares or 9.97 per cent of its current share capital to raise additional funds to strengthen its core capital ratios, including Common Equity Tier 1 (CET1) and Total Capital Ratio (TCR).

“The proposed private placement allows the company to raise funds expeditiously, as it can be implemented immediately,” Ambank said in a statement.

It would also improve the group’s liquidity and financial flexibility by strengthening its financial position without incurring interest expense as compared to borrowings, the group added.

The placement is expected to be completed in the second quarter of the year.

Ambank announced on February 26 the RM2.83 billion settlement with the Ministry of Finance in relation to the group’s historical transactions with 1MDB and its related entities.

AmBank stressed that it remained resilient with capital levels within the internal thresholds after taking into account the effects of the settlement.

“Notwithstanding this, the proposed private placement is an additional measure to accelerate the capital accretion of AMMB and to further strengthen AMMB’s capital position.

“This further re-assessment was made by AMMB following the settlement after receiving feedback from key stakeholders (including shareholders, bondholders, rating agencies, analysts and regulators). The group’s franchise remains viable and the additional capital will facilitate the implementation of growth strategies to deliver value for its shareholders,” it said.

Following the private placement, the group’s share capital is expected to increase to 3.31 billion shares, from 3.01 billion shares currently.

AmBank also said it was assessing the carrying value of goodwill relating to certain lines of business, taking into consideration the recent changes in circumstances over the past 12 months, as part of its annual review.

The outcome of the exercise is ongoing and will be subject to audit review.

Arising from the review, any goodwill impairment would be reflected in its results for the fourth quarter ended March 31, 2021, the group said.

“A goodwill write-down is a non-cash item, which will have no impact to regulatory capital ratios and does not affect future earnings, as it is a non-recurring item.

“This review will be more focused on the goodwill relating to conventional banking (RM1,495 million) and investment banking (RM428 million). Upon conclusion of this review, a separate announcement will be released as soon as practicable,” the group added.

Shares of AmBank closed seven sen or 2.39 per cent higher at RM3.00 yesterday, valuing the group at RM9.04 billion.

Source: NST