New Bank Negara regulation may affect CIMB, Maybank
PETALING JAYA: Bank Negara Malaysia (BNM) is planning to introduce new guidelines for financial institutions which could have a serious impact on the two largest banking groups in the country.
Both CIMB and Maybank could face a major dilemma with a new rule that does not allow a chief executive to take over as chairman of the board, The Singapore Straits Times reported today, adding that BNM intends the move to raise the governance standards in the boards of financial institutions.
BNM issued the guidelines to banks in March in what was called a concept paper, which is usually seen as proposals that are going to be implemented and which require feedback from the banks.
The proposed rules also state that banks must have a majority of independent directors on their respective boards.
Financial industry insiders said that the new guidelines are likely to be adopted in a matter of weeks.
“The thrust of the new rules is to protect the objectivity of the chairman and to clearly lay out the separation between the board and management,” the Singapore daily quoted a BNM official as saying.
He added that the main reason for such a rule to be in place would be to avoid situations where a chairman could be in a position to oversee policies that were put in place when that person was CEO.
CIMB’s Nazir Razak was chief executive officer (CEO) from 1999 to 2014 prior to his elevation as chairman of the board.
Nazir is currently on a self-imposed leave of absence as the bank conducts a review of his role in the disbursement of more than USD7 million (RM28.3 million) in political funds that his brother, Prime Minister Najib Razak, asked him to distribute before the last general election in 2013.
Nazir did not wish to comment on the new guidelines, the Straits Times reported.
Meanwhile, Maybank’s former CEO Abdul Wahid Omar, who is currently a Minister in the Prime Minister’s Department, is touted to return to the same banking group as chairman should he be dropped in the impending Cabinet reshuffle by Najib.
However, the new ruling would forbid him from taking up the chairmanship. Wahid was Maybank’s president and CEO between 2008 and 2013.