KUALA LUMPUR (July 9): Affin Bank Bhd (KL:AFFIN) shares extended their rally on Tuesday, following reports over the long weekend that the Sarawak government is nearing a major stake acquisition.

The counter closed at 20 sen or 7.7% higher at RM2.80, with some 19.4 million shares traded, more than 10-fold the counter's average daily trading volume.

On Saturday, Sarawak Premier Tan Sri Abang Johari Tun Openg indicated that there will be an official signing ceremony for Sarawak to acquire a major stake in “a bank” — widely understood to be Affin Bank Bhd — on July 19.

The premier, at a press conference for an event in Kuching last Friday, said Sarawak is set to take over a major block of a bank’s shares, which would pave the way for it to become a dominant player in the Malaysian banking landscape, according to the Dayak Daily.

Meanwhile, The Edge — citing sources — reported in its July 1 issue that the Sarawak government’s plan to acquire a substantial stake in Affin Bank from the lender’s key shareholders is likely to be inked this month.

Currently, Affin Bank’s largest shareholder is the Armed Forces Fund Board (LTAT) with a 28.88% stake. It is understood that Sarawak is to acquire Boustead Holdings Bhd’s entire 20% stake in Affin Bank, as well as part of LTAT’s stake. Boustead, which is wholly owned by LTAT, is currently the bank’s third-largest shareholder.

The bank’s second-largest shareholder is Hong Kong-based Bank of East Asia Ltd, which holds a 23.93% stake.