By Khairie Hisyam
AMMB Holdings Berhad (AmBank) is paying a penalty of RM53.7 million to Bank Negara Malaysia over non-compliance with “certain regulations” and is setting aside RM100 million over four years to improve its processes and governance.
In a regulatory filing, AmBank said the penalty is in relation to the central bank’s action pursuant to section 234 of the Financial Services Act 2013 and section 245 of the Islamic Financial Services Act 2013 respectively. Each section empowers Bank Negara to take action, including the power to impose monetary penalty, if it finds non-compliance with the respective Act and associated regulations.
“AmBank Group takes its compliance responsibility very seriously and has agreed with BNM a four-year programme of work towards achieving market best practices,” said AmBank to the stock exchange. “Moving forward, we have agreed with BNM that we will set aside an average of RM25 million per annum for four years for investment in systems, infrastructure and training.”
However AmBank did not specify details of its non-compliance and what they pertain to. It told the stock exchange that it had commenced its own review over the matter and has extended co-operation with the central bank, adding the review had strengthened its governance structure and is ongoing.
On July 2 this year the Wall Street Journal published an report alleging that some RM2.6 billion in funds found its way into bank accounts belonging to the prime minister in March 2013, though stating it did not know what the funds were for or how they were used. The accounts were at AmBank and AmIslamic Bank.
In an immediate response the prime minister denied any wrongdoing. The Malaysian Anti-Corruption Commission later confirmed the transfers as being “donations” from the Middle East without disclosing further details.
The penalty has no material impact on earnings, AmBank said.
“This series of measures will further enhance the robustness of our processes, reporting, improve our governance structure as well as safeguard against such circumstances recurring in the future and ensure that AmBank Group is well placed for future growth,” said AmBank.
On Friday, Nov 20, AmBank group announced the appointment of new group CEO Sulaiman Mohd Tahir, who also assumes the position of CEO for the group’s commercial banking arm AmBank (M) Bhd.
Previously CEO of CIMB Bank, Sulaiman takes over from former group managing director Ashok Ramamurthy who resigned in end-January this year.
On the same day AmBank group reported slightly lower revenue at RM2.09 billion for the second quarter ended Sept 30, 2015 (2Q16) compared to RM2.21 billion in 2Q15, which translated into lower pre-tax profit of RM500.98 million in 2Q16 compared to RM621.25 million in the previous corresponding period.
At the closing bell today AmBank shares were unchanged at RM4.59 per share.
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