Will Lai continue to lead Alliance?

The bank has been doing well during the past three years and the question everyone wants answered whether CEO Datuk Bridget Lai will continue to lead the bank

To the modern day investor, accurate and timely information is a lot more than just important. It is everything.

It does not come as a surprise therefore that Credit Suisse on Thursday moved to downgrade securities of Alliance Financial Group, ultimate owner of Alliance Bank Bhd.

Fundamental-wise, there is nothing that is in the open that could have led to the downgrade. The bank, under the stewardship of its chief executive officer (CEO), Datuk Bridget Lai, has been doing relatively well.

Going by its past years' financial figures, it would seem that Lai came to the bank in 2005 and turned it around almost immediately. Investors would have liked that, and they did until Lai was put at the centre of rumours which gained in intensity in recent weeks. When she was said to be leaving her post as CEO, the stock began to wobble.

It recovered a day later when Lai issued a statement saying that she was not going anywhere, that she was only clearing her annual leave and that the bank was operating as usual. Investors were pacified, but only temporarily.

They simply wanted to know more and some securities analysts say someone like Lai would not just leave the rumours flying around unchecked. After all, she clocked in three decades of a successful career with Standard Chartered Bank in Singapore.

But no one was saying anything and analysts said if Lai was on leave, at least the board could have assured them that everything was all right. But the board was mum on the issue.

On Wednesday, yet another rumour surfaced saying Lai herself was to hold a press conference that afternoon to explain the situation when in fact, she did not issue any invitation to a press conference.

The press scrambled to the said location where she was said to have planned the press conference but no one was there. The bank itself knew nothing about such a function and neither does its outside press relation advisers.

Analysts got into the fray and started looking for clearer answers as to what was really happening at Alliance Bank. But no one responded to their queries satisfactorily.

To a prudent investor, the option was simple - when in doubt, sell. That was what happened to the stock on Thursday.

The parent company held a briefing for analysts yesterday but it did not invite the press. Perhaps, it forgot that the stakeholders in the banking group are not only limited to investors in the company's securities, but also depositors in the bank whose source of news is largely the press instead of research reports.

Even then, some analysts came out of the briefing short of being satisfied with the answers given. The banking group denied all the rumours circulating within the past week, but said there was an internal probe going on. They said the CEO was on leave but they didn't know when she'll be back.

If it's worth repeating, the bank has been doing well during the past three years. The question everyone wants answered is precisely what yesterday's briefing did not answer - whether Lai will continue to lead the bank. Undoubtedly, the Alliance Banking Group is handling this issue very badly.