RHB Bank gets US$100mil Japanese Financing

Kuala Lumpur, Dec 9, 2005 : RHB Bank Bhd (“RHB Bank”) will be the gateway for a US$100 million infusion of financing from Japan for the small and medium industries (SMI) sector in Malaysia.

The facility will be extended by the Japan Bank for International Cooperation (“JBIC”) as a Two-Step Untied Loan to RHB Bank, which will then disburse the loan to small and medium enterprises (SMEs) operating in Malaysia.

“ The new facility will further strengthen the SMI sector and help boost Malaysia’s exports in the long term,” Deputy Chairman of RHB Bank, Dato’ Abdullah Mat Noh, said.

Officials of JBIC and RHB Bank signed a memorandum of understanding (MOU) for the loan today. Present to witness the signing ceremony, which was also held in conjunction with the on-going 11th Asean Summit here, was Deputy Governor of Bank Negara Malaysia Dato’ Ooi Sang Kuang.

Signing on behalf of JBIC was its Senior Executive Director, Mr Fumio Hoshi, while Dato’ Abdullah, who is also Chairman of RHB Sakura Merchant Bankers Bhd, signed on behalf of RHB Bank.

Under the first step of the Two-Step Untied Loan, JBIC will extend an attractively priced and packaged long-term financing of up to US$100 million (RM375 million) to RHB Bank. RHB Bank will then take the second step of disbursing the funds in smaller amounts at medium to long-term tenures to SMEs.

“ This long term financing arrangement with JBIC will allow RHB to continue in its leadership positioning in financing middle market and SME businesses in Malaysia,” said Dato’ Abdullah.

Mr Hoshi said the choice of RHB Bank as the institution to receive its untied loan was based on the fact that the Malaysian bank was now recognised internationally as a reputable financial institution.

“ RHB Bank has managed to build up a top quality portfolio not only in a single segment but all round,” he said. “We also have great confidence in the prudent management of RHB Bank.”

Mr Hoshi noted that RHB Bank already had a proven track record in the SMI sector. “RHB Bank has a huge base of SME customers which make up the second and third-tier supporting industries – the exact target market for which the loan has been given. These industries cater to the more prominent first tier manufacturers,” he said.

He added that RHB Bank, which is recognized as one of the biggest supporters of the Malaysian SMI sector, would channel the loan to its portfolio of SMEs in Malaysia to help them fund their medium to long-term capital investments as well as other capital expenditure projects.

“ RHB Bank’s long-standing strategic alliance with Sumitomo Mitsui Banking Corporation over the past 20 years was also a deciding factor as JBIC recognizes the importance of this relationship in the Malaysian banking sector,” Mr Hoshi said.

He also noted that JBIC’s objective of providing the loan was in line with Malaysian Government’s policy to encourage banking institutions to extend financial support to SMEs in Malaysia.

In welcoming JBIC’s move to extend the loan to RHB Bank, Dato’ Abdullah said it would enable the bank to obtain medium to long-term funds to fulfil its objective of strengthening its financial support for the SMI sector.

“ To be appointed by JBIC as the bank in charge of the disbursement of the loan is certainly very prestigious for us. Added to this is the fact that the loan comes with very attractive terms and conditions,” he added.

The loan also paves the way for the Japan-Malaysia Economic Partnership Agreement that will be signed next Wednesday (Dec 14, 2005) as part of the first East Asia Summit, one of the highlights of the on-going Asean Summit.

The move by JBIC to extend the loan to RHB Bank also marks a diversification from the Japanese government financial arm’s traditional practice of funding cross border investments and infrastructure development projects as well as other government-to-government initiatives. This makes RHB Bank the first private financial institution to receive a loan from JBIC.

JBIC, which is wholly owned by the Japanese Ministry of Finance, is the world’s largest government financial arm and second largest financial institution after the World Bank. Until now, its activities have revolved around government-to-government funding and financing of development and infrastructure projects in emerging economy countries.

Other Malaysian institutions that have benefited from JBIC’s efforts are the Malaysian Debt Venture Capital; Bank Pembangunan and Bank Industri (which have now been merged as the SME Bank), and EXIM Bank of Malaysia, all of which are government-linked financial institutions.

RHB Bank, the commercial banking unit of the RHB Group of Companies, offers a wide range of corporate, commercial and consumer banking as well as treasury products and services. It offers equipment and motor vehicle financing through its subsidiary RHB Delta Finance Bhd, as well as Islamic banking services through another subsidiary, RHB Islamic Bank Bhd.

Apart from the commercial banking products and services, the RHB Group also offers innovation and experience in investment banking, insurance, leasing, stockbroking & derivatives, research & analysis, asset management and unit trust. The group has earned numerous awards by industry observers, including recognition by Asiamoney as the “Best Bank in Trade Services” and “Best Domestic Equity House”.

Today, the RHB Group’s professional staffs serve corporate and individual customers via a network of more than 250 outlets across Malaysia, as well as in Singapore, Brunei and Thailand.