A new CEO for Bank Pembangunan?

According to MARKET, Bank Pembangunan Malaysia Bhd (BPMB) could have a new CEO in the coming months, with incumbent Arshad Mohamed Ismail considering leaving.

Speculation doing the rounds is that Arshad, who was appointed head of BPMB in April 2019, could be nearing the end of a three-year term and could consider leaving the minister-owned development finance institution. of Finance Inc (DFI).

Asked about this, BPMB said: “As a regulated entity, Bank Pembangunan does not comment on matters of a speculative nature.”

Nevertheless, three separate sources have heard of BPMB’s search for a new CEO.

A source, who spoke to The Edge on condition of anonymity, said: “From what I hear BPMB will need a CEO soon – Arshad is leaving – and there is already a search active in progress.” Another source echoed the same view, but added that Chairman Tan Sri Nazir Razak, who was appointed last April, is also involved in selecting a new CEO.

However, Nazir could not be reached at press time to confirm the rumours.

Nazir is a veteran of the banking industry. He is the founding partner and Chairman of Ikhlas Capital, an ASEAN private equity firm, and was Chairman of CIMB Group Holdings Bhd for four years and CEO for 15 years prior. He was also a non-executive director of Khazanah Nasional Bhd for four years and a member of the investment committee of the Employees Provident Fund for 15 years. Therefore, Nazir’s involvement in selecting a new CEO for BPMB is not surprising.

Nevertheless, a new appointment at the head of BPMB is expected to generate considerable interest as it is expected to play a key role in the merger plans of local DFIs, namely Small Medium Enterprise Development Bank Malaysia Bhd (SME Bank) and Export-Import Bank of Malaysia Bhd (Exim Bank), under his belt, as stated in the 2020 budget.

In November last year, BPMB completed the purchase of Danajamin Nasional Bhd, making it a wholly owned subsidiary and, more importantly, started the consolidation process.

A third source explains that BPMB was looking for a new CEO to synchronize and orchestrate the expanded entity – BPMB and Danajamin.

Although BPMB has performed well financially, its gross impaired loans, financings and advances ratio at 11.29% is considered high, but it is still down from 12.15% a year ago. In 2016, the ratio was above 15%.

For its financial year ending December 2020, BPMB recorded a net profit of RM107.08 million, up from RM251.59 million a year earlier. At the end of 2020, the DFI had total assets of RM23.48 billion while its total liabilities stood at RM15.51 billion.

The turbulent past of BPMB

The current situation at BPMB is much better than about four years ago when DFI was in the limelight due to loans of over RM200 million to Tan Sri KK’s Asian Broadcasting Network Sdn Bhd Eswaran, who had to auction off his assets to repay creditors.

BPMB had also awarded over RM300 million to two companies linked to Indonesian businessman Tan Sri Peter Sondakh – Integrated Nautical Resort Sdn Bhd and Garuda Suci Sdn Bhd – which built and operated the St Regis Langkawi and the Langkawi International Convention Centre. The convention center had suffered losses since 2013.

Eswaran and Peter Sondakh were known associates of former Prime Minister Datuk Seri Najib Razak, the brother of President Nazir.

In addition to the above, BPMB’s 90% owned Global Maritime Ventures Bhd unit, which operated a shipping finance fund, has also come under fire after it came to own 100% Syarikat Borcos Shipping Sdn Bhd, which had of a RM62.7 million facility with BPMB and of which KPMG was appointed liquidator at the end of December 2016.

BPMB also had a RM400 million exposure to Aries Telecoms, and reports said the DFI had taken legal action against the latter for RM451.27 million, but it is unclear how things turned out.

In April 2021, the Malaysian Anti-Corruption Commission (MACC) arrested four people linked to questionable loans made by BPMB, but what happened is not known.

The DFI has also been in the spotlight as its board and other committees have met more than 120 times a year, resulting in large payments to directors who have been remunerated for the meetings they attend. attended.

However, to put things into perspective, the many problems at the BPMB predated Arshad’s joining the DFI, and things seem to be more structured now.

With BPMB likely to play a leading role in merging various DFIs in the country, finding the right CEO for the job is imperative.

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