The Merger of Finance Companies in Malaysia

1556 WordsApr 6, 20117 Pages
FIN 426 Banking Operation and Documentation Assignment 1 “The finance company in Malaysia are no longer exist” Prepared By: ZURAINI BINTI SAMSURI 2010889082 EMBF5C PREPARED FOR: EN. HASBULLAH BIN OTHMAN Nowadays, there are no more finance companies in Malaysia. This situation occurred due to Asian financial crisis in mid year of 1997. Start with Thailand whereas Thai government has decided to float Thai Baht due to financial crisis. A few days later, the crisis spread out to Malaysia and Malaysia currency Ringgit was attacked by speculators. The Prime Minister during that time Dato’ Seri Dr. Mahathir Mohammad has claimed money broker George Soros is the cause of the crisis and he taking drastic action with imposed strict capital…show more content…
Meanwhile, the credit card balances of MBf Finance had not serviced for three months while housing and car debts had not serviced for three month. If MBf Finance loans provisions and writes off the dud loans, the owner and the shareholders must infuse new money but that may not be an option given. This is one of the examples in finance companies situation that made Bank Negara Malaysia announced on what they called ‘pre-emptive action’ that designed to strengthen the troubled company’s management which is anchor companies would merge with their smaller counterpart. Unfortunately, MBF Finance is not the anchor one that listed by BNM like Mayban Finance and Public Bank. MBf Finance had wanted to acquire a merchant bank but they could not get the approval. After that, BNM has yet grant MBf Finance and give requirement to be chosen as an anchor firm. The company satisfied the criterion for minimum shareholder fund less investment in subsidiaries of RM 300 million. But, MBf Finance apparently does not fulfilled requirement to be chosen as an anchor bank because of this five things, i) capital adequacy, ii) asset quality, iii) management efficiency, iv) earnings performance and v) liquidity position. After that, MBF had talking to Mayban Finance but the negotiations are officially off. Mayban Finance reportedly offered a price of more than RM 1 billion but MBf Finance is said to
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