How will RM200 million for Sabah Development Bank strengthen its capital position?

Question

Accepted Answer

RM200 Million Allocation to Strengthen Sabah Development Bank Through Share Conversion

The RM200 million allocated to Sabah Development Bank Berhad (SDBank) will strengthen its capital position through an accounting adjustment that converts existing government fixed deposits into redeemable preference shares (RPS). This strategic move does not involve any new cash injection from the state government. Instead, it alters the government's asset holding from fixed deposits to RPS, which is a key component of SDBank's transformation plan.
Conversion of Fixed Deposits to Redeemable Preference Shares

The RM200 million designated for SDBank represents a phased accounting adjustment. Existing fixed deposits held by the state government are being converted into redeemable preference shares (RPS). This means the government's asset base will shift from traditional fixed deposits to RPS, without any additional cash outflow from the state treasury.
No New Cash Injection Involved

It is crucial to note that this allocation does not signify a new cash injection into SDBank. The RM200 million is an internal restructuring of existing government funds held by the bank. This conversion is part of SDBank's broader transformation initiative aimed at bolstering its capital structure.
Potential for Increased Returns

The conversion from fixed deposits to RPS is anticipated to yield potentially higher returns. Previously, the government's fixed deposits earned interest at a rate of 2.95 per cent over a nine-month period. The newly issued RPS, however, could offer returns of up to 3.15 per cent annually. This potential increase is contingent upon the specific terms of the RPS issuance and SDBank's overall financial performance.

Reading history

Hide →

This history is cleared when the page is closed.

How will RM200 million for Sabah Development Bank strengthen its capital position?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

2

0

0

Share with friends