KUALA LUMPUR (March 7): A new broom sweeps clean at Bank Pembangunan Malaysia Bhd (BPMB), which has been alleged to have lax lending practices and lack of corporate governance.

"We believe that the BPMB will soon get a clean bill of health," said Finance Minister Lim Guan Eng, who is also present at the launch of BPMB's Industry Digitalisation Transformation Fund here today.

"We need a new person-in-charge [for the bank] and when you want to clean up a bank, I think the right person to do the job is sometimes a lady," Lim said in his keynote speech today.

"We have every confidence in Datuk Zaiton's ability to turn around the bank," said Lim.

BPMB is currently in the midst of cleaning up its books, according to newly-appointed chairman Datuk Zaiton Mohd Hassan, in an effort to return to the right track this year.

Zaiton, who took over the office on Feb 18, highlighted that the development financial institution (DFI) will start afresh "as soon as possible".

To recap, BPMB has been in the spotlight due to alleged lax lending practices and dubious loans, which were given to certain politically connected parties.

Some of the notable ones include the bank being a Malaysian DFI that had extended financing to Integrated Nautical Resort Sdn Bhd and Garuda Suci Sdn Bhd — two companies linked to Indonesian businessman Tan Sri Peter Sondakh — which built and operate the St Regis Langkawi and Langkawi International Convention Centre.

The DFI has replaced three CEOs in less than two years. Its CEO position has been vacant since last July. Former chief financial officer Afidah Mohd Ghazali was made the acting president and chief executive officer (CEO) of BPMB after Shaharuddin Zainuddin left in July last year.

Afidah stepped down early last month. And Razali Hassan, BPMB's chief operating officer since October 2018, has been assigned as the covering president and CEO. The DFI did not reveal the reason for the frequent change of CEO.

According to BPMB's 2017 annual report, its board met 27 times; the Risk Management Committee, 29 times; the Credit Committee, 28 times; the Nomination and Remuneration Committee, 24 times; and the Audit and Examination Committee, 16 times; which works out to a total of 124 meetings a year.

To put things in perspective, BPMB pays the chairman a RM15,000 fee per month while directors are remunerated RM5,000 a month. The chairmen of the Credit Committee, Group Nomination and Remuneration Committee, Audit and Examination Committee and Risk Management Committee get RM5,000 per meeting while the members receive RM3,000.

In FY17, its gross impaired loans stood at 12.15%, which means the DFI is writing off 12.15 sen for every ringgit it has lent out.

At the Dewan Negara, the new government had announced that it has no plans to reorganise or restructure DFIs, recognising their significance in supporting strategic industries.

Speaking at the press conference today, Zaiton said: "There are no guarantees, but the guarantee that we will give you is that we will try our very best."

She noted that moving forward the bank will be looking at the credit standards and credit processes of the company, whereby the bank would have to balance its developmental role, but not at the sacrifice of credentials.

Zaiton was appointed as the group's independent non-executive chairman effective immediately, for two years. She succeeds Tan Sri Dr Wan Abdul Aziz Wan Abdullah, who retired in November last year.