DBS Is Said to Revise Alliance Bank Offer Proposal to 30% Stake

Singapore’s largest bank, DBS Group Holdings Ltd., has scaled back its plans to acquire a stake in Alliance Bank Malaysia Bhd., reducing the proposed purchase from up to 49% to 30%, according to sources familiar with the matter. The move comes after DBS was unable to secure approval from Malaysia’s central bank for the original proposal, which would have required a special waiver since Malaysian regulations generally limit foreign ownership in financial institutions to 30%.

The revised plan is expected to have a higher likelihood of approval by Bank Negara Malaysia, the sources said. This adjustment would allow DBS to enter discussions with Alliance’s largest shareholder, Vertical Theme Sdn., a Malaysian holding company backed by Singapore’s state investor Temasek Holdings Pte. Temasek holds a 49% stake in Vertical Theme via Duxton Investment & Development Pte. and also owns roughly 28.3% of DBS.

A successful deal would give DBS a strategic presence in Malaysia, joining Singaporean peers Oversea-Chinese Banking Corp. and United Overseas Bank Ltd. Alliance’s shares have fallen 6% this year, while the Kuala Lumpur benchmark is down less than 2%, with the bank’s market capitalization at about 7.7 billion ringgit ($1.9 billion).