KUALA LUMPUR – Following its RM2.83 billion settlement with the government in relation to the 1MDB scandal, AMMB Holdings Bhd (AmBank) has proposed a private placement to raise an estimated RM810 million.
The group said it plans to issue up to 300 million new shares or 9.97% of its current share capital to raise additional funds to strengthen its core capital ratios, including Common Equity Tier 1 (CET1) and Total Capital Ratio (TCR).
“The Group remains resilient with capital levels within the internal thresholds after taking into account the effects of the settlement with the Ministry of Finance. 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,” Ambank said in a statement.
It will also improve the group’s liquidity and financial flexibility by strengthening its financial position without incurring interest expense as compared to borrowings, the group added.
Ambank announced the RM2.83 billion settlement with the Ministry of Finance on February 26 in relation to historical transactions involving the banking group with 1MDB and its related entities.
Assessment of goodwill for impairment
AmBank said it 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.
The outcome of this exercise is ongoing and will be subject to audit review. Arising from this review, any goodwill impairment will be reflected in AmBank’s results for the fourth quarter ended March 31, 2021, the group said.
“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 million) and investment banking (RM428 million). Upon conclusion of this review, a separate announcement will be released as soon as practicable,” the group added.
Shares of AmBank closed seven sen or 2.39% higher today at RM3.00, valuing the group at RM9.04 billion. Since the beginning of the year, the stock has fallen by 17.81%.