Sarawak union against takeover of EON Bank
KUCHING: Sarawak Bank Employees Union (SBEU) is very concerned with the adverse impact of the proposed takeover of EON Bank by Hong Leong Bank, claiming it would result in fewer bank branches in the state.
In a statement issued here, SBEU said it does not believe the takeover is in the best interest of customers and it is also not convinced that this will bring in long terms especially to Sarawak.
Given that both banks originated in Sarawak – Hong Leong was Kwong Lee Bank and EON Bank was Kong Ming Bank – it said this would lead to major duplication of branches in the state.
As such, it concluded that EON Bank should continue to be independent and provide a choice to customers.
“Our experience has shown that HLB (Hong Leong Bank) has been aggressive in closing down branches in Sarawak especially in the rural areas,” noted the statement signed by SBEU chief executive officer Andrew Lo.
It also stressed that bank closures have huge negative impact and social cost to employees in terms of job security and also to the public in terms of accessibility to banking services.
“Any merger will inevitably result in a net reduction in branches. Our concern is that in its drive to quickly realise the cost of the purchase, the bank would close down too many branches in order to show quick cost-saving returns,” it said.
According to SBEU, there is still a need to have small banks that understand the local conditions and able to serve the particular need of small business and depositors.
“The small banks play very useful roles and provide services to small businesses and rural communities. Removing them will drive money lending underground and increase loan sharking activities.
“Malaysia, with its wide varieties of industries with unique funding needs spread over a large geographic area, would be better served by a mixture of small and large banks allocating credit in a more efficient manner,” it said. SBEU also warned about the risk of big banks including those derived from mergers and takeovers.
“The global financial crisis has clearly proven our fears that big banks are dangerous. They become too big and arrogant and take huge risks driven by shareholders’ greed and require huge bailouts by tax payers.
“The consequences of a big bank failure are much greater. This is because the individual banks, being big, are more likely to have significant exposures to each other, so that the failure of one bank might render other banks insolvent,” it stressed.
It also said that mergers will result in significant reduction of effective competitors in the financial sector.
Source :[ Borneo Post ]