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Malaysia's AMMB Holdings to pay US$700m to government in 1MDB-linked settlement

Malaysia's AMMB Holdings to pay US$700m to government in 1MDB-linked settlement

The Petronas Twin Towers in Kuala Lumpur, Malaysia, Jan 11, 2021. (Photo: REUTERS/Lim Huey Teng)

KUALA LUMPUR: Malaysian banking group AMMB Holdings Berhad (AmBank) said on Friday (Feb 26) it will pay RM2.83 billion (US$699 million) to settle claims linked to a massive financial scandal at state fund 1MDB, a hefty payment that is expected to have a material impact on the group's earnings.

AmBank Group has been under scrutiny over its role in the alleged theft of US$4.5 billion from 1Malaysia Development Berhad, a state fund former prime minister Najib Razak set up in 2009.

Last year, Najib was found guilty of corruption and money laundering over the transfer of millions of dollars linked to a 1MDB unit into his AmBank accounts between 2014 and 2015. He denies wrongdoing and has filed an appeal.

READ: Former Malaysia PM Najib Razak sentenced to 12 years in jail following guilty verdict in 1MDB trial

In a filing with the bourse, AmBank said a provision for the sum will be recorded in the final quarter in the group's financial year ending Mar 31.

That will translate to a loss of 93.89 cents per share, it said.

"While this will have a material impact on the current year’s profitability, there are adequate capital buffers to absorb this settlement without an immediate need to raise additional equity capital," the group said.

The company will not be proposing any final dividends for the year ending Mar 31 as a result of the settlement, it added.

The finance ministry said in a statement Malaysia's securities regulator will require AmInvestment Bank Berhad to take corrective measures, including putting in place systems and processes to strengthen its due diligence framework, as part of the settlement.

The payment will also be used to help settle 1MDB's outstanding obligations, the ministry said.

The government said in November 1MDB was still US$7.8 billion in debt following the scandal.

In 2015, the Malaysian central bank gave AmBank a RM53.7 million fine for breaching certain financial regulations.

Source: Reuters/dv

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