January 11, 2018 / 11:26 AM / 5 months ago

Malaysia's CIMB to trim stakes in asset management JV with Principal Financial

KUALA LUMPUR, Jan 11 (Reuters) - CIMB Group Holdings Bhd will sell part of its stakes in two asset management joint venture units to U.S.-based partner Principal Financial Group for 470.3 million ringgit ($118.02 million).

The second-largest bank in Malaysia by assets has agreed to divest 20 percent in its asset management joint venture, and 10 percent in the Islamic asset management unit to Principal Financial Group, the company said in a statement to the bourse on Thursday.

Post sale, CIMB will be left with 40 percent in each CIMB-Principal entity.

The transaction is expected to be completed in the second quarter this year, and will not have any material effect on the group’s consolidated gearing and net assets for the financial year ending December 2018.

The bank is expected to recognize a gain of around 950 million ringgit, according to its stock filing.

The disposal will also improve CIMB’s common equity tier 1 ratio, a capital measure for banks, by 18 basis points.

CIMB and Principal partnered in 2004 and has operations across Malaysia, Singapore, Indonesia and Thailand. Both companies will continue to co-manage the joint ventures after the sale.

CIMB-Principal Asset Management Group has more than 70 billion ringgit in assets under management.

The lender beat analyst expectations in its third-quarter results, recording a net profit rise of 10.7 percent for the July-September period. Malaysia’s expanding domestic economy and improving capital market and consumer spending have buoyed banks’ performance in 2017.

$1 = 3.9850 ringgit Reporting by Liz Lee; Editing by Sherry Jacob-Phillips

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