March 9, 2020 / 1:09 PM / in 21 days

Veteran banker to helm Malaysia finance ministry amid economic crunch

KUALA LUMPUR (Reuters) - Tengku Zafrul Tengku Abdul Aziz, with over 23 years experience in the financial services industry and none in politics, is set to become Malaysia’s finance minister at a time when growth in Southeast Asia’s third biggest economy is at a 10-year low.

His appointment as finance minister - usually reserved for senior career politicians in Malaysia’s ruling coalition - could soothe investors’ worries over the unexpected resignation of 94-year-old Mahathir Mohamad as prime minister last month.

Zafrul was the chief executive officer at Malaysia’s second biggest lender CIMB Group Holdings Bhd until Monday afternoon. He relinquished all his positions at the bank immediately after the appointment.

New Prime Minister Muhyiddin Yassin said his ministerial appointments were in line with his goal of creating “a cabinet that delivers”. Zafrul is the first non-politician to be named as Malaysia’s finance minister.

“I am humbled by this enormous responsibility especially at a time when the country is facing unprecedented economic challenges,” Zafrul, 46, said after his appointment.

Zafrul will be appointed a senator in Malaysia’s parliament before being sworn in as finance minister on Tuesday. He will have two deputies.

“The appointment of such a seasoned banking heavyweight to the important portfolio will be seen positively by the market,” said OCBC economist Wellian Wiranto.

“There will be practically no honeymoon period for him however, given the urgency of having to deal with a stack of issues.”

Wiranto said Zafrul would have to reassure investors that the government has the means to diversify its revenue given Malaysia depends on oil and gas for 20% of its income while stimulating the economy amid the coronavirus outbreak.

Oil prices lost as much as a third of their value on Monday. Malaysian state energy firm Petronas is the third biggest exporter of liquefied natural gas.

Malaysia’s economic growth hit a 10-year low in the fourth quarter of 2019 and the central bank has warned of further risks.

Mahathir last month announced a $4.7 billion stimulus package to counter the impact of the coronavirus outbreak. He also slashed Malaysia’s projected 2020 growth rate.

Mohd Nazari Ismail, an economist and professor at University of Malaya, said as a non-politician Zafrul might be able to take unpopular harsh decisions without having to worry about the political implications.

Zafrul took over as CIMB’s chief executive in 2015 from Nazir Razak, the brother of former prime minister Najib Razak who is now facing corruption charges.

Under his stewardship, the bank pursued expansion plans in Southeast Asia and posted record profits in 2018.

Prior to CIMB, Zafrul was the chief executive officer of Maybank Investment Bank Bhd, the investment banking arm of CIMB’s bigger rival Malayan Banking Berhad (Maybank).

As CEO, Zafrul led Maybank Investment Bank’s $1.4 billion acquisition of Singapore brokerage firm Kim Eng Holdings.

In between his many banking jobs, Zafrul, also an avid cyclist and an Ironman competitor, set up Tune Money Sdn Bhd, an online financial service provider.

In a 2017 interview with the Singapore Straits Times, Zafrul had ruled out a career in politics.

“It is too rough for me,” he said.

Additional reporting by Krishna N. Das and Mei Mei Chu; Editing by William Maclean

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