KUALA LUMPUR -- Nazir Razak, who on Sept. 24 resigned as chairman of CIMB Group Holdings, one of Malaysia's largest banks, is the latest casualty in Prime Minister Mahathir Mohamad's overhaul of state-controlled companies.
Nazir, the youngest brother of scandal-tainted former Prime Minister Najib Razak, will step down as chairman and relinquish all other positions by Dec. 31, eight months before his contract expires.
His unexpected resignation comes as Mahathir, elected in May, reshuffles companies that are majority owned by sovereign funds. The prime minister wants to rid these companies of overpaid executives with political links. The 93-year-old leader also chairs the sovereign fund Khazanah Nasional, CIMB's biggest shareholder. In July, he replaced Najib and the entire Khazanah board, including Nazir.
There had been no official calls for Nazir to step down despite his relationship with Najib, who is facing over 30 counts of corruption and money laundering tied to state fund 1Malaysia Development Berhad.
In fact, Nazir, who was one of the few corporate leaders to be openly critical of 1MDB's governance, appeared to have been free to choose when to leave despite the wave of changes at other state-linked companies. "It is up to him," said Mahathir advisor Daim Zainuddin in July.
In a letter to staff, Nazir explained the timing of his departure. "Over the past few weeks, I have spent a lot of time thinking about it and decided that it would be most appropriate for me to leave upon the completion of T18," Nazir wrote.
T18 is a program launched in 2015 to cut costs and achieve a return on equity of 15% by the end of this year. The goal has since been lowered to between 10.5% and 11% amid uncertainties in the banking sector.
However, rumors of Nazir's departure had been circulating after the defeat of the Najib-led government in the May election.
Nazir's otherwise impeccable banking career came under scrutiny in March 2016 when The Wall Street Journal reported that he received $7 million from Najib. Nazir denied knowledge of the origin of the money, which was later funneled to politicians at the instruction of his brother. Nazir eventually stepped aside as chairman and ordered an independent inquiry, which cleared him of any wrongdoing.
The Edge, a leading Malaysian business publication, called Nazir an "unwarranted casualty" from the 1MDB fallout. The publication was suspended for a few months by Najib's government for its critical reporting of the scandal.
In nearly three decades with the group, the 52-year-old Nazir engineered a series of mergers and acquisitions that propelled CIMB from a small investment outfit to Malaysia's second-largest lender by assets. Along the way, the bank became a notable presence in Indonesia, Singapore and Thailand.
The bank's drive into other Southeast Asian markets accelerated while Najib held top government positions, first as deputy prime minister and later as prime minister and finance minister.
In the letter to staff, Nazir cited this expansion as one of the "personal highlights," from his near 30-year career at CIMB, highlighting the hostile takeover of the ethnic Chinese-controlled Southern Bank in 2006 and the merger of Bank Niaga with Bank Lippo in 2008. The latter led to the formation of Bank CIMB Niaga in Indonesia.
The University of Cambridge graduate is an advocate of economic integration in Southeast Asia, calling for businesses to form alliances instead of waiting for bureaucrats to drive liberalization.
"We should spend time helping companies in ASEAN to raise capital in more developed markets rather than having to wait for the formation of their own stock market," he told the Nikkei Asian Review in a 2016 interview.
As CIMB begins to look for Nazir's successor, market analysts say the lender's fundamentals will remain intact under the leadership of CEO Zahfrul Aziz, even as growth slows.
"His exit may also pave the way for investors perception of a more institutionalized and professionally managed CIMB, which would [be] deemed to be mildly positive to share price sentiment," UOB Kay Hian, a Singaporean research firm, said in a note.
The group's operating income fell 5% in the first six months of this year, over the same period last year due to slower capital markets. CIMB said it remains "relatively cautious" regarding growth prospects for the full year due to global trade tensions and increased uncertainties.
Other state-linked companies that have lost top executives in Mahathir's shake-up include Telekom Malaysia and Malaysia Airports Holdings. In addition, a lesser-known Razak sibling, Nizam, has resigned from the board of Petra Energy, an engineering services company.
The change of guard in these state-linked companies is likely to continue under Mahathir, who has insisted that management be professional with proven experience. Mahathir has said some 17,000 people were appointed to state agencies by the Najib government thanks to their political connections.
The prime minister has said he wants sovereign funds to focus on holding shares on behalf of the financially less-capable Malay majority under the country's Bumiputra policy, and reducing stakes in companies when appropriate to allow more Malays to own shares.