“Banks are facing a very difficult operating environment vis-à-vis margin contraction, technology and regulation.
“So, you would expect — in this dramatically changing situation — that people who used to own banks may not want to own them any more.”
He told The Edge Weekly in an interview: “It’s not a surprise. Anyway, for most businessmen, anything is for sale at the right price.”
Not too long ago, two owners of banks said they would be retiring soon.
The report said last August, Public Bank Bhd founder and chairman Teh Hong Piow announced his plan to relinquish chairmanship of the banking group early next year.
In January last year, AMMB Holdings Bhd chairman Azman Hashim announced that he would be exiting six entities in the AMMB group over a two-year period.
Azman holds 13% equity interest in AMMB Holdings while Teh has the lion’s share of 23.4% in Public Bank, according to The Edge Weekly.
There are rumours that other owners and controlling shareholders of banks are considering quitting the industry.
But, the report said, even as they appeared more prepared to give up their stakes, it had become more complicated now to exit banks because their intrinsic value had changed in the wake of the digital disruption currently shaking up the industry.
Nazir was quoted as saying: “For instance, CIMB is going to reduce the number of its branches in the next few years.
“What does that mean? If I merge and acquire another bank, I would shut down every branch of that bank.
“And what does that mean? I won’t pay the seller for the branches because those days a bigger branch network was worth something (but less so now).”
He said banks were not sure who their real competitors were. “Should I be sitting here worrying about Maybank, Public Bank and all that or should I be worrying about Grab and Alibaba?
“I was telling the CEO the other day, ‘Look, when I was CEO, you know what innovation was? Innovation was look to the West, copy, adapt and introduce. But today, the world is flat and we are just as advanced as the banks in the West.’
“And guess what? All of us are scrambling to know what to do vis-à-vis the new world.”
He noted that regulators did not like banks to be innovative. “There is a legacy thinking that once banks became too innovative, you had all those unconventional derivatives and a lot of people got hurt.
“This is actually ironic because for banks to survive in today’s environment, they have to be innovative! So, it’s tough to be a banker today.”
According to him the next phase for banks is to take advantage of what they have and to come up with a business transformation that will make them competitive again.
Nazir said the next five to 10 years would be the time of reckoning for banks and that some would do well and others might fade away because of their inability to move fast enough.
“There will be three types of banks. The ones that transform by using what they have and their capital — I think they will do well.
“Then you have the banks which can’t hold on to the customers, and all they do is to lend and take deposits where customers don’t see them again and they are just in the background somewhere.
‘And there will be a third group of banks that will die because they lend a lot of money to big businesses that did not prepare for technological change or the Fourth Industrial Revolution.”