What is the projected annual return difference between fixed deposits and RPS for SDBank?

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Projected Annual Return Difference Between Fixed Deposits and RPS for SDBank

The projected annual return difference between fixed deposits and redeemable preference shares (RPS) for Sabah Development Bank Berhad (SDBank) is 0.20 per cent, with RPS offering a potentially higher return. This adjustment reflects a strategic shift in how the Sabah government manages its assets within state-linked entities.
Potential Increase in Annual Returns

The RPS are projected to yield returns of 3.15 per cent annually. This is an increase compared to the 2.95 per cent interest that was previously earned on the nine-month fixed deposits. The difference of 0.20 per cent represents a potential uplift in the government's investment returns.
Conversion of Existing Assets

This change involves converting existing government fixed deposits into RPS, rather than a new cash injection. The RM200 million allocated to SDBank is part of a phased accounting adjustment to facilitate this conversion. This means the state government's asset holding will be reclassified from fixed deposits to RPS without any new outflow of funds.
Rationale for Transformation

The conversion to RPS is a component of SDBank's broader transformation plan. This initiative aims to strengthen the bank's capital position. The actual returns from the RPS are also subject to the specific terms of issuance and SDBank's overall financial performance.

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What is the projected annual return difference between fixed deposits and RPS for SDBank?

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