Malayan Banking Berhad

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Malayan Banking Berhad

14th Floor Menara Maybank, 100 Jalan Tun Perak
Kuala Lumpur
50050
Malaysia
Telephone: ( + 60) 3 2070 8833
Fax: ( + 60) 3 2070 2611
Web site: http://www.maybank2u.com

Public Company
Incorporated: 1960 as Malayan Banking Berhad
Employees: 20,821
Total Assets: $47.24 billion (2004)
Stock Exchanges: Kuala Lumpur
Ticker Symbol: MAYBANK
NAIC: 522110 Commercial Banking; 522291 Consumer Lending; 522292 Real Estate Credit; 522298 All Other Non-Depository Credit Intermediation; 523120 Securities Brokerage; 524113 Direct Life Insurance Carriers; 524114 Direct Health and Medical Insurance Carriers; 524126 Direct Property and Casualty Insurance Carriers

Malayan Banking Berhad is the holding company overseeing Malaysia's largest bank, Maybank and a range of financial sector subsidiaries. Maybank offers a full range of commercials, corporate, and private banking services, with a network of more than 450 branch offices and more than 2,500 ATM machines. Maybank, as the group as a whole is more commonly known, has also built a strong position in the regional market. The company operates more than 20 branches in Singapore and the Philippines and also has a banking presence in most of the other Southeast Asian markets, including Brunei, Papua New Guinea, Indonesia, and Vietnam. The bank also operates branches in New York and London. Maybank was the first Malaysian bank granted the right to establish a branch office in China, a particularly important market given the large and economically powerful ethnic Chinese population in Malaysia. In addition to its commercial banking network, Maybank operates a number of specialized subsidiaries in the insurance, investment banking and assets management, and finance sectors. The group's subsidiaries include Mayban General Assurance, Mayban Life Assurance, and Mayban Takaful, the latter focusing on developing insurance products compatible with Moslem law; the Aseam group, including Aseam Credit, Aseamlease, Aseam Unit Trust, and Aseambankers Malaysia Bhd; Mayban International Trust, Mayban Discount, and Mayban Investment Management; and Maybe Securities. Maybank was founded by Malaysian business tycoon Khoo Tech Puat, who died in 2004. The company has been led, however, for some two decades by President and CEO Amirsham A. Aziz. The largest Malaysian bank, Maybank boasted total assets worth $47 billion in 2004, placing it among the top 120 banks worldwide. Malayan Banking is listed on the Kuala Lumpur Stock Exchange.

1960s Origins

Khoo Teck Puat was born in 1918 into a wealthy Malaysia family of Chinese descent. Khoo's father, Khoo Yang Thin, had founded a trading business and also built up a portfolio of plantations and agricultural properties. The elder Khoo also became an important investor in a number of early Malaysian banking ventures, particularly among Malaysia's Hokkein, or ethnic Chinese community. When a number of Hokkein banks merged to form the Overseas Chinese Banking Corporation (OCBC) in 1933, the elder Khoo became one of its major shareholders.

Khoo Teck Puat went to work for OCBC, starting his career as a simple bank clerk. By the 1950s, Khoo had risen to a position of senior executive. By the end of the decade, however, Khoo recognized that his prospects at OCBC remained limited. Given the lack of further advancement open to him at OCBC, as well as what he considered the company's narrow perspective on its future, Khoo decided to set up his own bank and applied for a banking license. That license was granted to Khoo and a number of other OCBC executives who left the bank to form Malayan Banking Berhad in 1960.

Malayan Banking, which quickly became more commonly known as Maybank, was credited with becoming a founding force in the creation of a consumer banking industry in Malaysia. The country's independence following World War II, along with its swift economic growth into the 1960s, created a small but growing middle class. Maybank recognized the potential for this new market and instituted a rapid growth phase through the 1960s and 1970s. Maybank's growth was such that for an extended period the bank added more than 20 branches per year.

Early on, Maybank had already sought to extend its operations to include a wider array of financial services. The company established Mayban Trustees Bhd (MTB) in 1964 in order to provide a range of trustee products and services. MTB's operations grew to include trustee services for unit trust funds, loan stock and bond, corporate staff retirement and related funds, as well as executor and trust services for individuals and private estates.

In 1973, Maybank extended again, forming its own investment banking subsidiary, Aseambankers Malaysia Berhad, which stood for Asian & Euro-American Merchant Banking (Malaysia) Berhad. Two years later, Aseambankers expanded its own range of business through the establishment of a joint venture, Kota Discount Berhad, in partnership with a group of Kuala Lumpur-based investors. Maybank itself acquired a majority stake in Kota in 1986. Kota's name then changed to Mayban Discount Berhad in 1989.

In the meantime, Maybank's success enabled Khoo himself to emerge as one of Malaysia's wealthiest tycoons, with a fortune estimated at more than $5 billion by the time of his death in 2004. By the early 1980s, Khoo's interests had extended into the hotel market. The company's portfolio included many of Malaysia's most prominent hotels, including the Goodwood Park Hotel and the Ming Court Hotel. As in banking, Khoo's active interest in the hotel sector helped establish Malaysia as a prominent tourist destination.

Surviving into the 21st Century

By the mid-1980s, Khoo's holdings had expanded to an international level. Maybank had also begun to enter other markets, particularly nearby Singapore. Indonesia also formed a strategic market for the bank. At the same time, Maybank began targeting the expatriate Malaysian, focusing on the country's ethnic Chinese population and opening new branches around the world in such financial capitals as New York and London.

Maybank continued seeking new opportunities in the 1980s and 1990s. In 1987, for example, the company set up Mayban Securities Sdn Bhd in order to provide stockbroking and other investment services. Mayban Securities' primary market remained the Malaysian market, including the country's major institutional investors, as well as the growing number of wealthy individuals as Malaysia entered a period of sustained and significant economic growth.

In 1990, Maybank took advantage of the new Malaysian Offshore Banking Act passed that year to set up new operations in the Federal Territory of Labuan. The company established a number of new subsidiaries there, including Maybank International Ltd., offering confidential, personalized banking services, as well as an Offshore Islamic Banking service; Mayban International Trust, which launched a number of services, including the incorporation and registration of offshore companies, as well as tax compliance and administration services; and Mayban International Trust (Labuan) Berhad. Also in 1990, Maybank added Mayban Unit Trust Berhad, a subsidiary focused on the management of unit trust funds.

Maybank also expanded into the insurance market, launching Maybank General Assurance Bhd. In 1993, the company deepened its insurance operations through the acquisition of Safety Life & General insurance Sdn Bhd. That business was then relaunched as Mayban Life Assurance and refocused to provide insurance products exclusively to the large Maybank customer base. Thus, Maybank's life insurance unit remained without an agency network of its own and instead serviced customers through Maybank's own network of branch offices.

In the mid-1990s, Maybank began a new effort to increase its presence in the Southeast Asian region. In 1994, for example, the company set up a subsidiary in Papua New Guinea, which opened two branch offices in Port Moresby and Lae. Two years later, the company entered a joint-venture with PT Bank Nusa Internasional, bringing the Maybank name to the Indonesian market. Maybank later acquired control of the joint venture, PT Maybank Indocorp, holding nearly 94 percent of its shares.

Maybank also entered a number of smaller markets during this time, including Brunei, with three branch offices, and one branch each in Vietnam and Cambodia. The bank also added representative offices in Vietnam, Myanmar, and Uzbekistan.

Maybank next entered the Philippines in 1997, after the Philippine government passed legislation allowing foreign-owned banks to gain majority control of domestic banks. Maybank joined forces with Philippine National Bank, buying 60 percent control of the former Republic Savings Bank. Maybank subsequently renamed its new subsidiary Maybank Philippines Inc. (MPI) and later gained full control of the enterprise. MPI became the first and only foreign-controlled bank in the Philippines to succeed in putting into place a national network of branch offices. By the mid-2000s, MPI's network boasted nearly 60 branches across the Philippines.

These properties were acquired through Philmay Holding Inc., another joint venture with Philippine National Bank. The primary purpose of this venture was the establishment of the real estate and property development vehicle Philmay Property Inc., held at two-thirds by Maybank and one-third by Philmay Holding. These businesses also launched operations in 1997.

Company Perspectives:

The mind seeks continuous improvement to the quality of life through imagination and creativity. When innovation stops, so does growth. Maybank's continued growth through the years clearly reflects the importance placed on excellence in innovation.

The economic crisis that swept through Southeast Asia during the late 1990s exposed the shaky financial foundations of Malaysia's banking sector as well. As the country's largest bank, Maybank was required to participate in a vast consolidation of the country's banking industry. As part of that process, Maybank acquired a number of smaller banks, as well as two larger banks, Pacific Bank and PhileoAllied. The Pacific Bank merger was completed by mid-2000, while the PhileoAllied merger was finalized by the end of that same year.

The mergers enabled Maybank not only to maintain its position as Malaysia's top banking group, but it also boosted the company significantly in the ranks of the global banking industry. In the early 2000s, Maybank cracked the world top 120 banks for the first time.

Maybank's growing position was enhanced when it received a license to open branch offices in China. At the beginning of 2001, Maybank became the first Malaysian bank to enter the Chinese mainland when it opened a branch office in Shanghai. The move placed Maybank in position to serve as an important liaison between Malaysia's financially powerful Chinese community and China itself.

Into the mid-2000s, Maybank laid out a strategy to establish the bank as a prominent player among the ASEAN market. Yet the bank was prepared to proceed cautiously in its attempt to break into these markets. As one company executive told Euromoney, "We have aspirations to be a regional investment bank but it will have to happen slowly because we need to familiarize ourselves with the rules and regulations of those countries, and hopefully, in the not-too-distant future, we will be able to move into that area."

One of Maybank's international expansion efforts came in 2001, when it applied for a license to begin operations in Bahrain. The company, which already ranked as the leading foreign-owned bank in Singapore, also looked to expand in that market by seeking a Qualifying Full Bank license.

Back at home, Maybank entered another area of financial services with the launch of Mayban Takaful Bhd. The new entity enabled Maybank to begin promoting Takaful insurance products, that is, insurance products in compliance with Islamic law. Established in 2002, Mayban Takaful began targeting the individual and personal market with a line of family, education, personal accident, and motor vehicle policies.

Maybank's expansion hit a snag in late 2004 when it failed in a bid to take over Bank Permata of Indonesia. The acquisition would have provided Maybank with a new outlet for growth as the Malaysian market matured. The move to expand its operations in Indonesia was also seen as a way for the company to enhance its competitiveness in the face of a liberalization of the Malaysian market, which reduced restrictions on foreign bank operations there. By early 2005, Maybank appeared to have shrugged off the Permata setback and instead placed its hopes on a new expansion target. In March of that year, Maybank received approval to launch a takeover bid, through its Aseambankers subsidiary, of BinaFikir Sdn Bhd. The proposed acquisition promised to consolidate Maybank's position as a Malaysian and Southeast Asian banking powerhouse.

Principal Subsidiaries

Aseam Credit Sdn Bhd; Aseam Malaysia Nominees (Asing) Sdn Bhd; Aseam Malaysia Nominees (Tempatan) Sdn Bhd; Aseambankers Malaysia Bhd; Aseamlease Bhd; Mayban (Nominees) Sdn Bhd; Mayban Discount Bhd; Mayban General Assurance Bhd; Mayban International Trust; Mayban International Trust (Labuan) Bhd; Mayban Investment Management Sdn Bhd; Mayban Life Assurance Bhd; Mayban Life International (Labuan) Ltd; Mayban Nominees (Asing) Sdn Bhd; Mayban Nominees (Hong Kong) Ltd; Mayban Nominees (Singapore) Pte Ltd; Mayban Nominees (Tempatan) Sdn Bhd; Mayban Offshore Corporate Services (Labuan) Sdn Bhd; Mayban Securities (Holdings) Sdn Bhd; Mayban Securities Nominees (Asing) Sdn Bhd; Mayban Securities Nominees (Tempatan) Sdn Bhd; Mayban Securities Nominees Sdn Bhd; Mayban Securities Sdn Bhd; Mayban Takaful Berhad; Mayban Trustees Bhd; Mayban Unit Trust Berhad; Mayban Venture Capital Co Sdn Bhd; Mayban Ventures Sdn Bhd; Maybank (PNG) Ltd; Maybank International (L) Limited; Maybank International Islamic Banking Operations; Maybank Philippines Inc; Mayfin Nominees (Tempatan) Sdn Bhd; Philmay Holding Inc.; Philmay Property Inc.; PT Bank MayBank Indocorp; RPB Venture Capital Corporation.

Principal Competitors

RHB Bank Bhd; Bumiputra-Commerce Bank Bhd; Rashid Hussain Bhd; RHB Capital Bhd; Public Bank Bhd; AMMB Holdings Bhd; Hong Leong Bank Bhd; AMFB Holdings Bhd; EON Bank Group; HSBC Bank Malaysia Bhd.

Key Dates:

1960:: Khoo Teck Puat founds Malayan Banking Berhad (Maybank).
1963:: Maybank establishes a trustee branch, Mayban Trustees Bhd.
1973:: Aseambankers Malaysia Berhad is founded.
1975:: Aseambankers launches Kota Discount Berhad joint venture.
1986:: Maybank acquires a majority share of Kota Discount.
1987:: Maybank establishes Mayban Securities Sdn Bhd.
1989:: Kora Discount is renamed Mayban Discount Bhd.
1990:: Maybank sets up offshore operations in Labuan, including an offshore Islamic banking unit.
1994:: Maybank establishes a subsidiary in Papua New Guinea.
1995:: PT Bank Maybank Indocorp joint venture in Indonesia is established.
1997:: Maybank Philippines Inc. is established; Republic Savings bank is acquired in a joint venture with Philippines National Bank.
2001:: Maybank opens its first branch office in China, in Shanghai.
2002:: An Islamic insurance subsidiary is launched.
2005:: Maybank receives approval to bid for BinaFikir Sdn Bhd.