DBS intends to establish a retail banking presence in the Southeast Asian market. Credit: TK Kurikawa/Shutterstock.

Singapore’s largest lender DBS Group is considering acquiring stakes in local banks in Malaysia, reported Reuters citing two sources.

This move aligns with DBS’ strategy to establish a retail banking presence in the Southeast Asian market.

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DBS’s plan to enter the Malaysian market aligns with the country’s improving economic outlook, driven by new infrastructure projects and anticipated growth in credit demand.

One of the key targets for DBS is the 29.1% stake in Alliance Bank Malaysia, which is currently held by Singapore state investor Temasek.

The stake in Alliance Bank Malaysia is currently valued at about $460m.

DBS is also looking to acquire Kuwait Finance House‘s Malaysian retail banking assets. These assets, valued at over $500m, have been under sale.

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However, the discussions are in very early stages, and any formal negotiations would require approval from Bank Negara Malaysia, the country’s central bank.

DBS spokesperson was quoted by Reuters as saying: “We do not comment on market rumours and speculation.”

Kuwait Finance House said that the sale process for its Malaysian retail banking portfolio is in initial stages and could not provide further details.

DBS has made significant acquisitions in markets such as China, India, Indonesia, and Taiwan.

It is the said to be the only Singaporean bank without a retail banking presence in Malaysia, unlike local rivals OCBC and UOB.

In August 2023, DBS acquired Citigroup‘s consumer banking business in Taiwan.

DBS previously attempted to acquire Temasek’s stake in Alliance Bank in 2012, but those plans were thwarted by regulatory challenges.