KUALA LUMPUR: The passing of Tan Sri Teh Hong Piow is a huge loss for Public Bank Bhd but analysts do not expect this to materially affect the bank's outlook and strategic direction.
However, there would be an imminent change in Public Bank's shareholding structure, they said.
The late Teh was the largest shareholder with a 23.41 per cent stake or 4.54 billion shares as at March 14.
Based on the bank's closing price of RM4.40 on Dec 12, Teh's stake carried a total value of RM20 billion.
However, institutional investors held the most shares in Public Bank with a combined 42 per cent, according to simplywall.st.
"Institutional investors hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community," the portal noted.
CGS-CIMB Research said the Employees Provident Fund was a substantial shareholder with a 14.8 per cent stake as at March 14 this year, while Kumpulan Wang Persaraan had 4.1 per cent.
Public Bank had announced that Teh, its chairman Emeritus who founded the banking group in 1965, had passed away peacefully at 10.20am on Dec 12.
CGS-CIMB Research said his demise would trigger a major change in the shareholding structure of Public Bank with the potential emergence of a new substantial shareholder.
"However, we do not have any knowledge on the arrangement by the late Tan Sri Teh for these shares. The possibility of M&As (mergers and acquisitions) for Public Bank in the future depends on the plans by the person(s) who will inherit these stakes."
The firm said new shareholders could not hold more than 10 per cent per person in the bank.
"According to Section 92 of Financial Services Act, individuals are prohibited from owning more than 10 per cent stake in a financial institution unless they already held the stake before June 30 2013.
"As such, for the individual(s) who will inherit Tan Sri Teh's stake, he/she (they) cannot hold more than 10 per cent stake per person," it explained.
CGS-CIMB said Public Bank was backed by a strong and experienced management team, which included Tan Sri Dr Tay Ah Lek who is the managing director and chief executive officer, Datuk Chang Kat Kiam (deputy CEO), and Chang Siew Yen (senior chief operating officer.
"In fact, Public Bank has initiated its succession plan years ago when Tan Sri Teh relinquished his CEO position and was redesignated non-executive chairman on July 1 2002," they said.
CGS-CIMB, nevertheless, expects news of his demise to have near-term knee-jerk effect on Public Bank's share price, but the impact on its near-term earnings outlook could be limited.
Hence, the firm reiterated its "Add" call on the stock. This is premised on the potential re-rating catalyst from it having one of the lowest credit costs among its peers should the economic environment deteriorate in 2023 and from potential write-back in management overlay.
Sunway University professor of economics Dr Yeah Kim Leng said the organisational, work and banking culture that the late Teh had developed would likely continue through the senior management team he had nurtured over the decades.
"Less clear is whether his shareholding will remain intact under a trust or distributed among family members. "Under existing banking rules, any selldown could be subject to the maximum individual shareholding of five per cent," Yeah added.
Yesterday, Public Bank shares eased 0.23 per cent or one sen to RM4.39 for a market capitalisation of RM85.21 billion.