AMBank the financial institution involved in the 1MDB saga is seeking to reposition its account books after taking a beating from its involvement in the troubled sovereign fund. The bank which has come to a settlement with the Ministry of Finance with a commitment to pay RM2.3 billion will issue up to 300,000,000 new AMMB ordinary shares which represents approximately 9.97% of AMMB’s existing issued ordinary share capital.
However the price will be determined later and at a discount of not more than 10% to the volume weighted average market price of AMMB shares for the five (5) market days immediately prior to a price fixing date to be determined.
AMMB has clarified that it remains resilient with capital levels within the internal thresholds taking into account the effects of the settlement with the Ministry. Notwithstanding this, the Proposed Private Placement is an additional measure to accelerate the capital accretion of AMMB and to further strengthen AMMB’s capital position. It has also stated that group’s franchise remains viable and the additional capital will facilitate the implementation of growth strategies to deliver value for its shareholders.
This means of capital funding came about after due consideration of the various methods of equity fund raising, the Board was of the opinion that the Proposed Private Placement is the most efficient avenue of fund raising as:
(i) it enables AMMB to raise additional funds to enhance and strengthen its core capital ratios including CET1 and TCR;
(ii) it allows AMMB to raise funds expeditiously pursuant to the General Mandate obtained from shareholders at AMMB’s last Annual General Meeting to meet funding requirements;
(iii) it improves the liquidity and financial flexibility of AMMB by strengthening its financial position without incurring cost as compared to borrowings; and
(iv) it is expected to facilitate the entry of new institutional investors into AMMB.
The Proposed Private Placement is expected to be completed by the 2nd quarter of calendar year 2021.
Assessment of Goodwill for Impairment
AMMB is assessing the carrying value of goodwill relating to certain lines of business, taking into consideration the recent changes in circumstances over the past 12 months, as part of the annual review exercise.
Also duly noted that the outcome of this exercise is on-going and will be subject to audit review. Arising from this review, any goodwill impairment will be reflected in AMMB’s fourth quarter results for the financial year ended 31 March 2021.
A goodwill write-down is a non-cash item, which will have no impact to regulatory capital ratios and does not affect future earnings as it is a non-recurring item.
This review will be more focused on the goodwill relating to conventional banking (RM1.495 billion) and investment banking (RM428 million).