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Kota Kinabalu: The Sabah Government has rejected Datuk Seri Mohd Shafie Apdal's claim that converting RM200 million in State fixed deposits with Sabah Development Bank Berhad (SDBank) into Redeemable Preference Shares (RPS) amounts to a bailout.
Assistant Finance Minister II Datuk Mohd Ishak Ayub said the move does not involve new funds, but converts existing deposits into RPS to strengthen SDBank's capital base while providing the State with an annual dividend of 3.15 per cent, or about RM6.3 million.
He said allowing the wholly State-owned bank to fail would expose Sabah to about RM3 billion in outstanding bonds and other liabilities, describing the move as prudent financial risk management rather than a bailout.
Mohd Ishak said SDBank's new board and management have been implementing governance reforms and a recovery programme since the second half of 2023, while cash recoveries from non-performing loans have reached about RM3.3 billion since July 2023.
He also rejected claims that the restructuring of Sabah International Petroleum Sdn Bhd (SIP) was a bailout, saying it strengthened the company financially, while stressing that the Government would continue making decisions to protect Sabah's finances and strategic State assets.
