What's up in Public Bank?

What's up in Public Bank?

Since its last bonus issue of shares about 10 years ago, Public Bank Bhd had remained relatively quiet, steadily growing amid an increasingly competitive market, without any new corporate exercise until two days ago.

Announcing on Thursday its intention to merge its local (L) and foreign (F) shares, Public Bank had inadvertently put itself in the limelight, whereby some dealers started to speculate that the latest corporate exercise could be a prelude to an even bigger corporate exercise.

As it stands, though, industry observers regard the proposed merger of Public Bank's "L" and "F" shares as merely a "long overdue, normal process".

Maybank Investment Bank Bhd (MIB), for one, points out that the proposed exercise "is more administrative in nature".

MIB in its report says the move will have little bearing on Public Bank's share price.

The proposed merger of Public Bank's local and foreign shares is expected to be completed by the second quarter of this year. This will then see the lender's "L" and "F" shares being quoted and traded on Bursa Malaysia Securities under a single stock code 1295.

"The existence of Public Bank's 'L' and 'F' shares is purely historical in nature. In the days of script-based transactions, foreign investors were limited to buying just foreign shares, which represented a maximum 30 per cent of Public Bank's share capital base. Back then, Public Bank was one of several banks that had both their local and foreign tranches listed, but the others have since merged their shares, and today, Public Bank is the only one that has yet to do so," MIB says in his report.

The primary difference between Public Bank's 'L' and 'F' shares, MIB points out, lies in the voting rights.

"In the case of Public Bank's 'F' shares, foreign investors were not entitled to voting rights once the 30 per cent limit was exceeded.

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