The ministry said the proposal was a reasonable action and an investment decision that provides positive returns in the form of competitive and sustainable dividends to contributors.

It said LTAT currently holds an effective interest of 48.7% in Affin Bank.

“The proposed release of part of the interest is targeted at stakeholders with strong financial capabilities and will provide higher added value to the bank in the form of business growth and increased profits for a long-term period,” the ministry said in a written answer published on Parliament’s website.

It was in response to a question from Ikmal Hisham Abdul Aziz (PN-Tanah Merah) who wanted to know the rationale behind LTAT’s plan to sell its stakes in Affin Bank, which is an investment entity under LTAT that managed to record profits every year.

The defence ministry said LTAT will remain a significant shareholder in Affin Bank if the sale is finalised.

It also said that as a retirement fund, LTAT should prioritise asset diversification and manage its investments by prioritising fund stability and continued returns.

“Any proposed shareholding transfer is subject to the approval of regulatory bodies including Bank Negara Malaysia as a compliance measure to its corporate governance,” stated the ministry.