(Melaka, Friday): Two days ago, the Asian Wall Street Journal reported that Bank Bumiputra Bhd. is facing such extensive problems that the Malaysian government will likely have to rescue the bank for the third time in its 33-year history.
In early March, Bank Negara disclosed that if certain "extreme conditions" came to pass, Bank Bumiputra would require a capital injection of about RM750 million. It now appears that the Bank Negara’s worst-case scenario was too optimistic, and it requires an injection of over RM1 billion to keep afloat.
Anwar’s response to the AWSJ report that it was "somewhat too premature and negative" and that the government was taking the necessary measures is most unsatisfactory and unacceptable.
This will be the third time in 12 years that Bank Bumiputra needs bail-out at the expense of the public, making it the most bailed-out bank in the world!
In 1986, Bank Bumiputra was given a RM2.5 billion bail-out using Petronas funds as a result of the Bumiputra Malaysia Finance (BMF) scandal involving George Tan and Carrian of Hong Kong. George Tan was recently released from Hong Kong jail for his role in the Carrian and BMF scandals, but Bank Bumiputra has continued to fumble from one bail-out to another.
In 1989, Bank Bumiputra was bailed out a second time with Parliament allocating RM1.06 billion due to monumental provision of RM1.23 billion for non-performing loans.
Now, Bank Bumiputra needs a third bail-out of over RM1 billion as it is expected to post losses of more than RM1 billion for the year ended in March.
Before the government commits another RM1 billion in a third bail-out of Bank Bumiputra in 12 years, the full list of the bad debts should be made public first, so that Malaysians know who are the people who refuse to repay the mega-loans they had taken from Bank Bumiputra, and for which the public are now asked to bear responsibility by putting up another RM1 billion to save Bank Bumiputra from insolvency.