Completion of SME Bank and EXIM Bank transfers to Bank Pembangunan has no rating impact

Published on 09 May 2025.

Share Tweet Email

The completion of Bank Pembangunan Malaysia Berhad’s (BPMB) acquisition of Small Medium Enterprise Development Bank Malaysia Berhad (SME Bank) and Export-Import Bank of Malaysia Berhad (MEXIM) from Minister of Finance (Incorporated) (MoF Inc.), as announced by BPMB on 1 May 2025, does not have any rating impact. SME Bank and MEXIM are now wholly owned subsidiaries of BPMB. 

The transaction consolidates MoF Inc.’s ownership of these development financial institutions (DFIs) under a single entity. Marking the second phase of the government’s DFI consolidation plan following BPMB’s acquisition of Danajamin Nasional Berhad in 2021, the consolidation aims to create a larger entity with greater scale to meet national development goals. As a consolidated group, BPMB will have an enlarged asset base of approximately RM52 billion.

BPMB provides medium to long-term financing to sectors vital to the country’s socio-economic development while MEXIM supports and promotes Malaysia’s external trade. SME Bank nurtures and caters to the financing needs of SMEs, a segment which accounts for more than a third of the country’s GDP. Together, the three institutions play complementary roles within the development finance ecosystem, addressing distinct segments of the economy. 

Both BPMB and MEXIM are currently rated AAA/Stable/P1 by RAM (see Table 1 for issue ratings), which mirrors the Government of Malaysia’s sovereign credit strength. While details of the operational integration have not been disclosed at this time, we expect the strategic mandates of the respective banks to stay intact in the immediate term, with some potential refinements in business alignments later. MoF Inc. remains BPMB’s ultimate shareholder. 

The overall financial impact of the consolidation on BPMB is anticipated to be manageable. The transaction was executed through a share swap involving the issuance of new shares to MoF Inc. Management has indicated that the transaction will not significantly affect BPMB’s capitalisation. As at end-September 2024, prior to the acquisition, BPMB’s tier-1 and total capital ratios were a strong 29.6% and 34.4%, respectively. The ongoing liquidation of Danajamin, when completed, would also provide some uplift to capitalisation levels.

 

Analytical contacts
Johan Bin Faizul
(603) 2708 8235
johan@ram.com.my

Amy Lo
(603) 2708 8289
amy@ram.com.my

Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my

 

The credit rating is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2025 by RAM Rating Services Berhad