Malaysia-based Public Bank's (KLSE:PBBANK) planned purchase of a 44.15% stake in insurer LPI Capital (KLSE:LPI) will not influence its issuer credit ratings, S&P Global Ratings said in a Wednesday release.
The rating agency expects the bank to maintain robust capitalization even if it pushes through with its offer to acquire the insurer's remaining shares.
The insurer's small size compared to the bank and profitable business as well as the discount provided by the offer's cash consideration entail that the acquirer will keep its solid financial position, S&P said.
The rating agency sees the company's risk-adjusted capital ratio staying above 10%, supporting its "strong" capital and earnings assessment.
Moreover, the acquisition will help the bank widen its geographical footprint in the general insurance segment to Malaysia and Singapore, from its current operations in Cambodia, which supports its aim to become a universal bank, S&P said.
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