Shares of Malayan Banking Bhd (Maybank) dropped as much as 0.67 percent after the largest bank by assets in Malaysia said it would raise US$1.2 billion with a new share offer to fund growth in the country and its regional subsidiaries.
"This sounds logical to us as Maybank may be required to bring in capital if it is required to locally incorporate its Singapore subsidiary, which currently holds a qualified full banking licence," HwangDBS Vickers Research said in a note on Monday.
Maybank said on Monday it completed the bookbuilding exercise for the private placement, the largest so far in Malaysia's corporate history.
The placement is a proactive move to boost Maybank's equity capital ahead of the implementation of the stringent new solvency requirements of the Basel III global banking regulations, Maybank said in a statement.
The issue price was fixed at RM8.88 a share, Maybank said, while the total number of shares to be issued represents 4.98 percent of the enlarged issued and paid-up share capital of Maybank as at Sept. 30.
The private placement exercise is expected to be completed no later than the middle of October, added Maybank.
HwangDBS maintained its "buy" rating on Maybank stock with a target price of RM11.10.
"Maybank remains our top pick and we believe our investment thesis of high dividends and strong earnings momentum remains intact despite these developments," said HwangDBS.
The stock was down 0.56 percent at RM8.94, underperforming the broader index's 0.15 percent drop. -- REUTERS
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