RHBCap: No plans to raise capital

RHB Capital Bhd(1066), the country's fourth largest banking group, will not raise anymore capital this year, chief of the pension fund which owns the lender said.

"We are quite comfortable with our CAR (capital adequacy ratio) now and have no plans to raise more," Employees Provident Fund (EPF) chief executive officer Datuk Azlan Zainol told Business Times on the sidelines of a banking summit in Kuala Lumpur yesterday.

EPF owns 52 per cent of RHB Capital.

RHB Capital's Tier-1 capital, or the most liquid form of capital, stood at 9.5 per cent, while its risk-weighted capital ratio (RWCR) was at 13.2 per cent, according to a Hwang-DBS Vickers Securities report on April 10. The ratios measure banks' ability to absorb writedowns and defaults.
The Securities Commission in December approved RHB Capital's plan to raise RM1.1 billion from the sale of commercial papers and medium-term notes, which will be used to refinance existing debt and for working capital.

Malaysian banks, including Malayan Banking Bhd and Public Bank Bhd, have tapped shareholders and the debt market to raise fresh capital in recent months to prepare for a potential spike in bad loans this year amid the protracted global economic downturn.

They are joining other lenders globally and in the region in racing to boost their capital buffer as the overall capital requirement for banks may rise as a result of the financial crisis.

Meanwhile, Hong Leong Bank Bhd, the sixth largest by asset, said its strong capital position allows it to be "opportunistic" with regard to growth.

"The organic growth may slow down a bit in the current environment. We have to find new ways to growth and investing for new capacity," managing director Yvonne Chia said, without elaborating.

Hong Leong Bank had 13.7 per cent Tier-1 capital and 14.1 per cent RWCR at the end of December, according to Citi Investment Research.