Anwar should direct the Finance Ministry and Bank Negara to give an urgent and thorough briefing to all MPs so that they could handle an avalanche of public queries about the stability of banks and finance companies


Media Statement
by Lim Kit Siang

(Petaling Jaya, Tuesday): Yesterday, the Deputy Prime Minister and Finance Minister, Datuk Seri Anwar Ibrahim refuted for the umpteenth time adverse rumours about the stability of banks, declaring for the umpteenth time that the banking and finance system in the country was solid.

Yesterday, Bank Negara also stated for the umpteenth time that depositors should not be afraid to place their money with local financial institutions and that depositors were protected by the central bank in terms of principal plus interest.

The very fact that the Deputy Prime Minister and the Bank Negara had to keep giving such assurances in the past few months is testimony that more effective measures are needed to restore public confidence in local banks and finance companies.

Members of Parliament, whether from the government or opposition parties, must have the common experience of being asked by their constituents about the safety of their deposits in banks and finance companies.

Anwar should direct the Finance Ministry and Bank Negara to give an urgent and thorough briefing to all MPs so that they could handle an avalanche of public queries about the stability of banks and finance companies.

MPs should be informed of the measures which have been taken to ensure that there is a recapitalisation of banks and finance companies to restore public confidence in their solidity.

The Finance Ministry and Bank Negara should take MPs into their confidence and brief them as to the position of the various individual banks and finance companies in the country so that MPs have the requisite information to help restore public confidence in the banking and finance sector.

The Government and local financial institutions should be aware that the people are currently particularly sensitive about developments in the banking and financial sector, and it has not gone unnoticed that Malayan Banking Bhd. had reacted very differently when its long-term counter-party rating was cut by STANDARD & POORíS (S&P) last Monday (December 22) to A from A+ and the ratings on the bankís subordinated notes to A- from A.

S&P in its statement explaining the downgrading of Malayan Bankingís rating said that it reflected the view that the economic slowdown in Malaysia and the neighbouring countries would be more severe than anticipated and that Maybankís profitability and asset quality were likely to be affected "to such a degree that an A+ long term rating is no longer appropriate".

There was no objection or challenge from Malayan Banking for the downgrading by one notch within the A category for its long-term counter party rating.

This was very different from Maybankís reaction to S&Pís first downgrading of Maybankís counterparty ratings at the end of August, when S&P revised its outlook on Maybankís counterparty ratings to negative from stable, i.e. A+/Negative/A-1 from A+/Stable/A-1.

At that time, the Maybank strongly protested and challenged S&Pís downgrading

Maybank managing director Amirsham A. Aziz said that S&P should have discussed with Malayan Banking Bhd and looked at all the underlying numbers and the bankís management policies before revising downwards its rating for the bank.

He said: "To be fair, I think S&P should have discussed with us first before coming out with a statement. We are about to have discussions with them, next month. S&P were just looking from their point of view and their perception of the economy, and trying to make a guess on the impact on Maybank."

Is the silence of Maybank to the second downgrading by S&P in four months an acceptance by the Maybank management of the latest downgrading?

(30/12/97)


*Lim Kit Siang - Malaysian Parliamentary Opposition Leader, Democratic Action Party Secretary-General & Member of Parliament for Tanjong