Comments on: Public Bank Tier 1 Capital Concerns

By: larry

larry — Mon, 30 Mar 2009 04:49:18 +0000

Boon Pin – Thanks for your insight on the Dubai system, it sounds prudent. In Malaysia, Core Tier 1 excludes Hybrid Securities (eg Unsecured Notes and other qualifying securities which typically rank pari passu with other unsecured liabilities of the Bank and are subordinated to other secured rights in the event of winding up). They may qualify as Tier I Capital in determining the capital adequacy ratios of the Bank, up to a maximum of 15% of Tier I Capital, with any excess qualifying as Tier II Capital. I’m not aware if Bank Negara has any intention to raise CAR, I recall from media reports few months back that they were actually looking to relax the Statutory Reserve Deposit requirements.

Winter – I’m not aware of privatization of PBB. it would be a gigantic effort, not because of the $$$ but because of regulations and public policy, and can only be done by the government (or God of course).

By: winter

winter — Sun, 29 Mar 2009 15:54:17 +0000

Hi,
Latest unofficial info, PBB maybe going private, if so at what price u think? Will shareholders expect a windfall should a buy-back be on the cards?

By: Boon Pin

Boon Pin — Sat, 28 Mar 2009 14:06:50 +0000

What is core Tier 1 capital compared to Tier 1 capital?

I work in Dubai. Over here Tier 1 capital adequacy ratio (CAR) for bank is 11% with deadline by Jun09. Emirates NBD, largest bank in Duba and one of the largest bank in the region, has a CAR ratio of9.4%.

Does Central Bank has any intention on raising CAR?

By: larry

larry — Tue, 24 Mar 2009 08:42:38 +0000

Quite true Jeff. I too believe that you can slowly accumulate. But need to realize that NPLs are just starting to form and by year-end we could be in for a rough ride. If NPL is worst than expected, Public Bank may be forced to raise equity capital to prop up its Tier 1 and CAR. Unemployment is still on the rise globally and the little bull run in Wall Street we witnessed recently could just be a false dawn.

By: Jeff

Jeff — Tue, 24 Mar 2009 04:34:33 +0000

Well, I will say that the choppy situation should apply to banking sector in general and not just Public Bank.

* Increasing NPLs
* Slowing loan growth
* A more competitive landscape
* Increasingly competent competitors

IMHO, Public Bank’s edge seems to be against the few risks stated above, as it has lowest NPL rate in the sector, high loan quality, and good quality management.

Is this a good time to buy banking stocks? It is subjective but I do think it is a good time to start accumulating. =)

By: fark.my

fark.my — Thu, 19 Mar 2009 06:38:22 +0000

Public Bank Tier 1 Capital Concerns : Horizon.my…

PBBANK has always traded at a premium to its peers. It trades at around 2.7 times its Shareholders Funds compared to Malaysia’s banking sector average of less than 1.5x. Regionally banking stocks trade between 0.6 to 2.0x. Indeed Public Bank is one o…