MARC Ratings has affirmed its AAA financial institution (FI) rating on Bank Pembangunan Malaysia Berhad (BPMB) following the bank’s acquisition of two development financial institutions (DFI), namely Small Medium Enterprise Development Bank Malaysia Berhad (SME Bank) and Export-Import Bank of Malaysia Berhad (EXIM Bank). BPMB acquired the DFIs from Minister of Finance (Incorporated) (MOF Inc). Concurrently the rating agency has affirmed its AAA FI rating on SME Bank. The outlook on both ratings is stable.
The affirmed ratings and outlook reflect MARC Ratings’ continued expectation of government support to BPMB and SME Bank given their statuses as effectively wholly government-owned entities mandated with supporting the country’s development objectives. The rating agency understands that post-acquisition, the acquired DFIs will continue to operate based on their existing mandates as subsidiaries of BPMB. MARC Ratings also notes that BPMB’s cash position was unaffected by the transaction, which was undertaken via share swaps. The acquisition will still result in healthy consolidated capital levels for BPMB.
Over the near term, the rating agency will conduct its annual rating reviews of BPMB and SME Bank, reflecting the new corporate structure in its assessments. Meanwhile, the AAAIS/Stable ratings on the existing Islamic Medium-Term Notes programmes of BPMB and SME Bank, and MARC-1IS/Stable rating on the Islamic Commercial Papers of SME Bank, have also been affirmed.