KUALA LUMPUR (REUTERS) - Malaysian banking group AMMB Holdings Berhad (AmBank) will pay RM2.83 billion (S$929 million) to the government to settle claims related to its involvement in a multi-billion-dollar financial scandal at state fund 1MDB, the finance ministry said on Friday (Feb 26).
AmBank Group has been under scrutiny over its role in the alleged theft of US$4.5 billion (S$6 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 charges 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.
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 March 31. That will translate to a loss of 93.89 sen (S$0.31) 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 March 31 as a result of the settlement, it added.
As part of the settlement with AmBank, 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, the finance ministry said.
"Resolving this through the court system would have cost a lot of time, money and resources," Finance Minister Tengku Zafrul Aziz said in a statement. "With this settlement, the payment of the monies will be expedited, instead of being held up by lengthy court battles, and can be utilised to fulfil 1MDB's outstanding obligations."
The government said in November that 1MDB was still US$7.8 billion in debt following the scandal. In 2015, the Malaysian central bank hit AmBank with a RM53.7 million fine for breaching certain financial regulations.