Bank Negara did not approve Sulaiman Abdul Taib's re-appointment as chairperson of banking group RHB Capital Bhd but has consented to his appointment as non-independent and non-executive director for a two-year period.

The central bank conveyed the decision to RHB Capital late yesterday afternoon and the announcement was posted later in the evening on Bursa Malaysia website.

His re-appointment as a director of RHB Bank and RHB Sakura Merchant Bankers Bhd has yet to be approved by Bank Negara, RHB Capital said, adding that Sulaiman shall be re-appointed to the boards of the relevant companies once approval is obtained.

Sulaiman, 37, is the younger of the two sons of Sarawak Chief Minister Abdul Taib Mahmud.

According to banking industry analysts, the central bank's decision has been anticipated as it was obvious other major shareholders such as Khazanah Nasional Bhd and the Employees Provident Fund (EPF) wanted to have greater control in the running of the banking group.

By not approving Sulaiman's re-appointment as chairperson of RHB Capital is to suggest that it is very unlikely he will be re-appointed executive chairperson of RHB Bank Bhd and there will be major changes to the board, they said.

Yesterday, before Bank Negara's decision was conveyed to RHB Capital, malaysiakini reported that the delay in the central bank in approving Sulaiman's re-appointment had raised questions about the Taib family's future stake in banking and Sulaiman's own future in politics.

An application for the re-appointment of Sulaiman as director and executive chairperson of RHB Capital Bhd was made on November 18, 2004, prior to the expiry of his office on May 7, 2005.

Applications for his re-appointment as a director on the boards of RHB Bank and RHB Sakura Merchant Bankers Bhd were made on November 9 and 19, 2004 respectively prior to the expiry of office on May 7, 2005.

Not attractive to sell

The market has been abuzz with rumours that if and when a new chairperson carry out changes and execute plans, including the possibility of RHB Bank being absorbed into the larger banking group Commerce International Merchant Bankers (CIMB), the 100 per cent owner of Bumiputera Commerce Bank Bhd (BCBB), how will the deal turn out for shareholders of RHB Capital who want to cash out - like the Taib's family?

Ever since the central bank determined the criteria for non-performing loans from six months down to three months, RHB Bank's NPL rate is around 25 per cent, according to informed sources.

"It's not going to be attractive to sell if you have a large NPL portfolio," a bank manager told malaysiakini in Kuching today.

With the new directive from Prime Minister Abdullah Ahmad Badawi that GLCs must be better and more prudently managed and must show better returns of shareholders' funds, the anticipated board changes to RHB banking group do seem to make sense, he said.

"The other shareholders are finally getting their act together," he said, adding that "we should see some interesting developments in the days ahead."

One such development is the positive stock market reaction to news of changes in RHB Capital which in the last few days has seen its shares going up as a result.

TONY THIEN is malaysiakini 's Sarawak-based stringer.