Maybank surprised investors on Wednesday by saying it would pay US$1.5 billion for 56 per cent of Indonesia's sixth-largest lender - a 23 per cent premium to Tuesday's share price - and would offer to buy out the bank's minority shareholders for US$1.2 billion.

Maybank said it would buy 42 per cent of BII shares from Singapore investor Temasek and the remaining 14 per cent stake from Korea's top lender, Kookmin Bank.

'The price tag... was more than 50 per cent higher than we assumed for a mediocre franchise,' Citigroup said in a note, downgrading Maybank to a sell from a buy. It slashed Maybank's target price to RM8.38 (S$3.63) a share from RM10.63.

Maybank shares fell as much as 11 per cent to RM8 a share in the first few minutes of trade, its lowest level since August 2004. At 9.26am, the stock fetched RM8.35.

The offer price represented 4.6 times book value, expensive even when compared with Chinese banks that trade at between 3.3 and 5.4 times book value, according to Reuters data. -- REUTERS