THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. (Incorporated in Malaysia under the Companies Ordinances, )

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1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the course of action to be taken, you should consult your stockbroker, bank THIS manager, CIRCULAR solicitor, IS accountant IMPORTANT or other AND professional REQUIRES advisers YOUR immediately. IMMEDIATE ATTENTION. If Bursa you are Malaysia in any doubt Securities as to Berhad the course takes of no action responsibility to be taken, for you the should contents consult of this your Circular, stockbroker, makes bank no representation manager, solicitor, as to accountant its accuracy or or other completeness professional and expressly advisers immediately. disclaims any liability whatsoever for any loss howsoever arising from, or due to your reliance upon, the whole or any part of the contents of this Circular. Bursa Malaysia Securities Berhad takes no responsibility for the contents of this Circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from, or due to your reliance upon, the whole or any part of the contents of this Circular. MALAYAN BANKING BERHAD MALAYAN (Company BANKING No K) BERHAD (Incorporated in Malaysia (Company under the No. Companies 3813-K) Ordinances, ) (Incorporated in Malaysia under the Companies Ordinances, ) CIRCULAR TO SHAREHOLDERS CIRCULAR TO SHAREHOLDERS IN RELATION TO THE IN RELATION TO THE PROPOSED ESTABLISHMENT OF AN EMPLOYEES SHARE GRANT PLAN OF UP TO 7.5% OF THE TOTAL NUMBER OF ISSUED SHARES OF MALAYAN BANKING BERHAD ( MAYBANK ) (EXCLUDING TREASURY SHARES) AT ANY POINT IN TIME AND NOTICE OF EXTRAORDINARY GENERAL MEETING Principal Adviser The Notice of the Extraordinary General Meeting ( EGM ) of Maybank and Form of Proxy are enclosed in this The Notice of the Extraordinary General Circular. The details of the EGM are as follows: Meeting ( EGM ) of Maybank and Form of Proxy are enclosed in this Circular. The details of the EGM are as follows: Date and time of the EGM : Date and time of the EGM Thursday, Thursday, 6 April April at at noon noon or or immediately immediately th following following the the conclusion conclusion or or adjournment adjournment (as the (as the case case may may be) be) of of the the 57 th th Annual 57 th Annual General General Meeting Meeting of of Maybank Maybank scheduled scheduled to to be be held at the same venue and on the same day at a.m., whichever is later held at the same venue and on the same day at a.m., whichever is later Venue of the EGM : Venue of the EGM Grand Grand Ballroom, Ballroom, Level 1, Level 1, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, Kuala Lumpur, Malaysia Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, Kuala Lumpur, Malaysia Last Last date date and and time time for : Wednesday, 5 April 2017 at noon lodging the Form of Proxy for Wednesday, April 2017 at noon lodging the Form of Proxy If If you are you are unable unable to to attend attend and and vote vote at at the EGM, the EGM, you you may may appoint appoint a proxy proxy or or proxies proxies to attend to attend and vote and vote on your on your behalf. behalf. If you If you wish wish to do so, do so, you must you must deposit deposit the Form the Form of of Proxy Proxy at the at the office office of our of our appointed appointed share share registrar registrar for for the EGM, the EGM, Tricor Tricor Investor Investor Services Services & Issuing Issuing House House Sdn Bhd, Sdn Bhd, at at Unit 32-01, Unit 32-01, Level Level 32, Tower 32, Tower A, A, Vertical Business Vertical Business Suite, Avenue Suite, Avenue 3, Bangsar Bangsar South, South, No. No. 8, Jalan 8, Jalan Kerinchi, Kerinchi, Kuala Lumpur, Kuala Lumpur, Malaysia Malaysia or or its Customer its Customer Service Service Centre Centre at at Unit G-3, Unit G-3, Ground Ground Floor, Floor, Vertical Podium, Vertical Podium, Avenue Avenue 3, 3, Bangsar Bangsar South, South, No. No. 8, Jalan 8, Jalan Kerinchi, Kerinchi, Kuala Kuala Lumpur, Lumpur, Malaysia Malaysia no later no later than Wednesday, than Wednesday, 5 April 2017 April 2017 at at noon. noon. The The lodging of the lodging of the Form Form of of Proxy does not preclude you from attending and voting in person at our EGM should you subsequently wish to do so. Proxy does not preclude you from attending and voting in person at our EGM should you subsequently wish to do so. This Circular is dated 16 March 2017 This Circular is dated 16 March 2017

2 DEFINITIONS In this Circular, the following abbreviations shall have the following meanings unless otherwise stated: Act : Companies Act, 2016 Board : Board of Directors of our Company Bursa Depository : Bursa Malaysia Depository Sdn Bhd Bursa Securities : Bursa Malaysia Securities Berhad By-Laws : The by-laws governing the Proposed ESGP, the draft of which is set out in Appendix II of this Circular CDS : The Central Depository System governed under Securities Industry (Central Depositories) Act, 1991 CDS Account : The account established by Bursa Depository for a depositor for the recording of deposit of securities and dealings in such securities by that depositor of securities Circular : This circular dated 16 March 2017 in relation to the Proposed ESGP Constitution : Constitution of our Company (currently referred to as the Memorandum and Articles of Association of our Company) Director : A natural person being a director in our Group Distributions : The entitlement of the ESGP Shares to any dividends, rights, allotments and/or any other distributions made by our Group Effective Date : The date the Proposed ESGP takes effect which will be on a date of full compliance with the relevant requirements of the Listing Requirements and other conditions set out in By-Law 8.1 and shall be determined by the ESGP Committee EGM : Extraordinary general meeting Eligible Employees : Employees and/or Executive Directors of our Group who are selected to be eligible to participate in the Proposed ESGP on terms set out in the By-Laws and include any person who is proposed to be employed/engaged/appointed as an employee of our Group EPS : Earnings per Share ESGP : Employees Share Grant Plan ESGP Agreement : An agreement arising between a ESGP Participant and our Company upon acceptance of the ESGP Grant by Eligible Employees pursuant to the By-Laws ESGP Committee : The committee comprising directors and/or executives appointed by our Board to administer the Proposed ESGP in accordance with By- Law 10 ESGP Grant : An offer made by the ESGP Committee to the Eligible Employee to enter into the ESGP Agreement as set out in By-Law 30 and where the context permits, shall include any supplemental ESGP Grant referred to in By-Law 30.5 i

3 DEFINITIONS (Cont d) ESGP Grant Date : The date on which an ESGP Grant is made or deemed made by the ESGP Committee to a Selected Employee which shall not be later than the last day of the ESGP Grant Period, during which the Selected Employee can accept the ESGP Grant in accordance with By-Law 30 ESGP Grant Period : The period of thirty (30) days from the date of the ESGP Grant or such other period as may be determined by the ESGP Committee to an Eligible Employee in accordance with the By-Laws for the acceptance of the ESGP Grant ESGP Participants : Eligible Employees who accept the ESGP Grant ESGP Period : The period of the ESGP as set out in By-Law 8.1 ESGP Shares : Shares to be issued pursuant to the Proposed ESGP ESGP Vesting Conditions : The conditions determined by the ESGP Committee in respect of the vesting of the ESGP Grant which must be fulfilled for the ESGP Shares to be vested in a ESGP Participant, including those set out in By-Law 35 ESGP Vesting Date : The date on which ESGP Shares are vested in the ESGP Participant Executive Director : A Director holding office in an executive capacity who is involved in the day-to-day management and is on the payroll of our Group Existing ESS : Employees share scheme of our Company which was established on 23 June 2011 and will expire on 23 June 2018 FYE : Financial year ended Listing Requirements : Main Market Listing Requirements of Bursa Securities LPD : 17 February 2017, being the latest practicable date prior to the printing of this Circular Maybank or Company : Malayan Banking Berhad Maybank Group or Group : Maybank and its Subsidiaries Maybank IB : Maybank Investment Bank Berhad Maybank Shares or Shares : Ordinary shares in our Company MFRS 2 : Malaysian Financial Reporting Standard No. 2 Share Based Payments NA : Net assets Participating Maybank Group : Maybank Group excluding dormant Subsidiaries Performance Targets : The performance targets recommended by the ESGP Committee and approved by our Board as set out in an ESGP Grant which are to be achieved by the Eligible Employees and/or the Maybank Group Proposed ESGP : Proposed establishment of an employees share grant plan of up to 7.5% of the total number of issued shares of our Company (excluding treasury shares) at any point in time ii

4 DEFINITIONS (Cont d) Record of Depositors : A record of securities holders established by Bursa Depository under the rules of Bursa Depository as issued pursuant to the Securities Industry (Central Depositories) Act, 1991 Selected Employees : An Eligible Employee to whom an ESGP Grant is/is to be made pursuant to By-Law 30.1 Subsidiaries : Subsidiaries of Maybank within the meaning of the Act and shall include such subsidiaries which are existing as at the Effective Date and those subsequently acquired or incorporated at any time during the ESGP Period unless determined by our Board and/or the ESGP Committee to fall outside the expression of Subsidiaries pursuant to By-Law 17.1 VWAMP : Volume weighted average market price CURRENCY RM and sen : Ringgit Malaysia and sen All references to you in this Circular are to the shareholders of our Company. All references to our Company and Maybank in this Circular are to Malayan Banking Berhad. All references to Maybank Group and our Group in this Circular are to our Company and our subsidiaries. All references to we, us, our and ourselves are to our Company and our subsidiaries, and in the context of the Proposals, shall exclude any subsidiaries which are dormant, save where the context otherwise requires. Unless specifically referred to, words denoting the singular shall, where applicable, include the plural, and vice versa, and words denoting the masculine gender shall, where applicable, include the feminine and/or neuter genders, and vice versa. Reference to persons shall include corporations, unless otherwise specified. Any reference to any enactment in this Circular is a reference to that enactment as amended or reenacted from time to time. Any reference to a time of day in this Circular is a reference to Malaysian time, unless otherwise stated. Any discrepancy in the figures included in this Circular between the amounts stated and the totals thereof are due to rounding. iii

5 CONTENTS PAGE LETTER TO OUR SHAREHOLDERS IN RELATION TO THE PROPOSED ESGP CONTAINING: 1. INTRODUCTION 1 2. DETAILS OF THE PROPOSED ESGP 2 3. RATIONALE FOR THE PROPOSED ESGP 5 4. USE OF PROCEEDS 6 5. EFFECTS OF THE PROPOSED ESGP 6 6. APPROVALS REQUIRED 9 7. INTERESTS OF THE DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED WITH THEM CORPORATE EXERCISE/SCHEME ANNOUNCED BUT PENDING COMPLETION ESTIMATED TIMEFRAME FOR COMPLETION HISTORICAL SHARE PRICES DIRECTORS RECOMMENDATION EGM FURTHER INFORMATION 12 APPENDICES I - SUMMARY INFORMATION ON THE EXISTING ESS 13 II - DRAFT BY-LAWS 15 III - FURTHER INFORMATION 35 NOTICE OF EGM FORM OF PROXY ENCLOSED ENCLOSED iv

6 MALAYAN BANKING BERHAD (Company No K) (Incorporated in Malaysia under the Companies Ordinances, ) Registered Office: 14 th Floor, Menara Maybank 100, Jalan Tun Perak Kuala Lumpur Malaysia 16 March 2017 Board of Directors Tan Sri Dato Megat Zaharuddin Megat Mohd Nor (Non-Independent Non-Executive Director/Chairman) Datuk Abdul Farid Alias (Non-Independent Executive Director/Group President and Chief Executive Officer) Dato Dr Tan Tat Wai (Independent Non-Executive Director) Dato Johan Ariffin (Independent Non-Executive Director) Datuk Mohaiyani Shamsudin (Independent Non-Executive Director) Datuk R. Karunakaran (Independent Non-Executive Director) Cheng Kee Check (Non-Independent Non-Executive Director) Edwin Gerungan (Independent Non-Executive Director) Nor Hizam Hashim (Independent Non-Executive Director) Dr Hasnita Dato Hashim (Independent Non-Executive Director) Anthony Brent Elam (Independent Non-Executive Director) Datin Paduka Jamiah Abdul Hamid (Independent Non-Executive Director) To: Our shareholders Dear Sir/Madam, PROPOSED ESGP 1. INTRODUCTION On 26 January 2017, on behalf of our Board, Maybank IB announced that our Company proposes to establish and implement an employees share grant plan of up to seven point five percent (7.5%) of the total number of issued shares of our Company (excluding treasury shares) at any point in time for the vesting of ESGP Shares to the Eligible Employees in accordance with the By-Laws. On 14 March 2017, on behalf of our Board, Maybank IB announced that Bursa Securities had, vide its letter dated 13 March 2017, approved the listing and quotation of such number of new Maybank Shares, representing up to 7.5% of the total number of issued shares of Maybank (excluding treasury shares) at any point in time, to be issued under the Proposed ESGP on the Main Market of Bursa Securities, subject to the conditions as set out in Section 6 of this Circular. The purpose of this Circular is to provide you with the details of the Proposed ESGP and to seek your approval for the ordinary resolutions pertaining to the Proposed ESGP to be tabled at our forthcoming EGM. The Notice of EGM together with the Form of Proxy are enclosed in this Circular. You are advised to read and consider carefully the contents of this Circular before voting on the voting on the ordinary resolutions pertaining to the Proposed ESGP to be tabled at our forthcoming EGM. 1

7 2. DETAILS OF THE PROPOSED ESGP The Proposed ESGP will entail the establishment of an employees share grant plan for the award of ESGP Shares to the eligible Executive Director(s) and employees of the Participating Maybank Group who fulfil the criteria for eligibility which will be stipulated in the By-Laws and subject to such Proposed ESGP not contravening any foreign laws, regulatory requirements and/or administrative constraints in the respective countries. The ESGP Committee may from time to time, within the ESGP Period, have full discretion to determine the composition of the corporations within the Participating Maybank Group to be eligible to participate in the Proposed ESGP. The Proposed ESGP, which will be valid for a period of seven years and will be administered by the ESGP Committee, is intended to reward and retain Eligible Employees as well as to attract new talents in the future. At the discretion of the ESGP Committee, Maybank may from time to time, within the ESGP Period, invite Eligible Employees to enter into ESGP Agreements at the ESGP Grant Date. This is subject to the Eligible Employees fulfilling the terms and conditions which will be set out in the ESGP Grant. Subject to acceptance of the ESGP Grant, the ESGP Shares will be vested to the Eligible Employee on the ESGP Vesting Date(s) provided that the ESGP Vesting Conditions are met. The ESGP Shares under the Proposed ESGP may be granted over a five-year period and each grant will be vested based on a three-year cliff vesting schedule (i.e. vested at the end of three years from the ESGP Grant Dates). For illustration purposes, ESGP Shares which are granted to the ESGP Participants on 1 July 2017 will be vested to the ESGP Participants on 30 June 2020 subject to the ESGP Vesting Conditions being met. The number of ESGP Shares to be vested to the ESGP Participants will be based on, among others, the following over the three-year cliff vesting schedule as recommended by the ESGP Committee and approved by our Board: (iii) achievement of individual key performance indicators by the ESGP Participants; meeting overall performance targets of the Maybank Group; and/or meeting such other target that aligns the interests of the ESGP Participants with those of the shareholders of Maybank. In the event that the ESGP Participants do not meet the above targets over the said period set by the ESGP Committee or any of the ESGP Vesting Conditions, the ESGP Shares will not be vested to him/her at the end of the vesting schedule. The ESGP Shares on the ESGP Vesting Dates will be settled by way of issuance and allotment of new Maybank Shares or by way of cash settlement as determined by the ESGP Committee. For avoidance of doubt, the new Maybank Shares to be issued and allotted to the ESGP Participants would not require any payment by the ESGP Participants to our Company. In the event that any foreign laws, regulatory requirements and/or administrative constraints prevent or restrict the ability of our Company to allow the eligible employees of overseas branches and subsidiaries within the Participating Maybank Group to participate in the Proposed ESGP, an alternative cash-settled performance-based scheme may be made available to them. In the case of settlement by way of cash, the reference price used to determine the amount to be paid to the ESGP Participants will be based on the market value of the ESGP Shares after taking into account, among others, the VWAMP of Maybank Shares for the five (5) market days immediately preceding the ESGP Vesting Date. 2

8 The method of settlement to be made by our Company to the ESGP Participants under the Proposed ESGP would be at the discretion of the ESGP Committee. The Proposed ESGP is not intended to replace, but to complement the Existing ESS to enhance the competitiveness of the total remuneration package of the Participating Maybank Group. As at the LPD, our Company has a total of 365,334,200 outstanding ESOS Options (as defined in Appendix I of this Circular) and RSU Shares (as defined in Appendix I of this Circular) granted under the Existing ESS. For the avoidance of doubt, the aggregate number of Maybank Shares which may be awarded under the Proposed ESGP and any other schemes involving the issuance of new Maybank Shares to employees which are still subsisting (including the Existing ESS) shall not exceed 7.5% of the total number of issued shares of our Company (excluding treasury shares) at any one time. In the event no ESGP Shares are awarded, the aggregate number of Maybank Shares which may be awarded under the Existing ESS shall remain as up to 10% of the total number of issued shares of our Company (excluding treasury shares) at any one time. However, upon the expiry of the Existing ESS on 23 June 2018, the maximum number of ESGP Shares allowable would not be restricted by the number of ESOS Options exercised or RSU Shares vested. Kindly refer to Appendix I of this Circular for a summary of the Existing ESS. 2.1 Salient terms of the Proposed ESGP The salient terms of the Proposed ESGP are as follows: Eligibility Eligible Employees who meet the following criteria as at the ESGP Grant Dates shall be eligible for consideration and selection by the ESGP Committee to participate in the Proposed ESGP: (iii) (iv) (v) if he/she has attained the age of 18 years and is not an undischarged bankrupt; if he/she is employed on the payroll of any corporation in the Participating Maybank Group and has not served a notice of resignation or received a notice of termination; if he/she is an Executive Director, the specific allocation of ESGP Shares granted by our Company to him/her in his/her capacity as an Executive Director under the Proposed ESGP has been approved by the shareholders of Maybank at a general meeting; if he/she is serving in a specific designation under an employment contract, excluding those who are on short-term contract or any other employees under contract as may be determined by the ESGP Committee; if he/she is not participating or entitled to participate in any other employee share scheme implemented by any other corporation in the Participating Maybank Group which is in force for the time being provided that he/she may be eligible for consideration notwithstanding such participation or entitlement to participate if the ESGP Committee shall so determine; and 3

9 (vi) if he/she fulfils any other criteria and/or falls within such category as may be set by the ESGP Committee from time to time. Eligibility for consideration under the Proposed ESGP does not confer an Eligible Employee with any rights whatsoever under or to participate in the Proposed ESGP. The selection of any Eligible Employee for participation in the Proposed ESGP shall be made at the sole discretion of the ESGP Committee whose decision shall be final and binding Quantum The maximum number of ESGP Shares which may be made available under the Proposed ESGP and any other schemes involving the issuance of new Maybank Shares to employees which are still subsisting (including the Existing ESS) shall not exceed in aggregate 7.5% of the total number of issued shares of our Company (excluding treasury shares) at any point of time during the duration of the Proposed ESGP ( Maximum ESGP Shares ). In the event the aggregate number of Maybank Shares which may be awarded under the Proposed ESGP and any other schemes involving the issuance of new Maybank Shares to employees which are still subsisting (including the Existing ESS) exceeds the Maximum ESGP Shares at any point in time as a result of our Company purchasing or cancelling Maybank Shares in accordance with the provisions of the Act and/or undertaking any corporate proposal resulting in the reduction of our Company s total number of issued shares, no further ESGP Grants shall be awarded by the ESGP Committee until such aggregate number of Maybank Shares awarded falls below the Maximum ESGP Shares Maximum allowable allocation and basis of allocation The aggregate maximum number of ESGP Shares that may be allocated to any one category/designation of Eligible Employees shall be determined by the ESGP Committee provided that the allocation to any individual Eligible Employee who, either singly or collectively through persons connected with the Eligible Employee (as defined in the Listing Requirements), holds 20% or more of the total number of issued shares of our Company (excluding treasury shares), shall not exceed 10% of the Maximum ESGP Shares. The actual number of ESGP Shares to be allocated to the Eligible Employees shall be determined by the ESGP Committee after taking into consideration factors which may include the Eligible Employees position, ranking, performance, contribution and potential contribution to the continued success of the Maybank Group Duration of the Proposed ESGP The Proposed ESGP shall take effect on the Effective Date and shall be in force for a period of seven years from the Effective Date. On the expiry of the Proposed ESGP, any ESGP Grants which have yet to be vested shall be deemed terminated, and be null and void. 4

10 2.1.5 Rights attaching to the ESGP Shares The ESGP Shares to be issued and allotted pursuant to the Proposed ESGP shall rank equally in all respects with the then existing issued Maybank Shares. The ESGP Shares to be allotted to the ESGP Participants pursuant to the ESGP Agreement shall not be entitled to any Distributions which may be declared, made or paid to Maybank shareholders, for which the book closure date is prior to the date on which the ESGP Shares are credited into the CDS Account of the ESGP Participants. For purposes of the Proposed ESGP, the book closure date means the date as at the close of business on which shareholders of our Company must be registered as a member and whose names appear in the record of depositors maintained at Bursa Depository in order to be entitled to the Distributions Administration The ESGP Committee shall have the absolute discretion in administering the Proposed ESGP, including prescribing the financial and performance targets/criteria and such other conditions as it may deem fit. Any liberty, power or discretion which may be exercised or any decision or determination which may be made by the ESGP Committee (including any selection) pursuant to the By-Laws may be exercised in the ESGP Committee s sole and absolute discretion having regard to the terms of reference which our Board may establish to regulate and govern the ESGP Committee s functions and responsibilities under the By-Laws. 2.2 Listing and quotation of the ESGP Shares Bursa Securities had, vide its letter dated 13 March 2017, approved the listing and quotation of such number of new Maybank Shares representing up to 7.5% of the total number of issued shares of our Company (excluding treasury shares) at any point in time to be issued under the Proposed ESGP on the Main Market of Bursa Securities. 3. RATIONALE FOR THE PROPOSED ESGP Maybank strives to align its total rewards strategy with that of its long term objectives of creating sustainable value enhancement for its shareholders, and believes that this is key in nurturing a high performance culture. Maybank constantly reviews its employees total remuneration structure as part of its total reward strategy in providing the right remuneration, benefits and career development or progression opportunities. The remuneration structure includes, among others, a basic salary and a variable cash bonus payout to reward its employees based on his/her individual performance achievement at the end of each financial year. The use of variable cash bonus is seen as a short-term incentive mechanism that rewards an employee for his/her annual contributions and achievements. Our Board believes that the Proposed ESGP, together with the Existing ESS, serves as a long-term incentive plan which would enable the Eligible Employees to align their interests with the long-term objectives of our Group to create sustainable value enhancement for its shareholders through a high performance culture. 5

11 In addition, the Proposed ESGP is intended to: (iii) continue to retain and motivate key talents as well as attract prospective skilled and experienced employees to the Participating Maybank Group by making the total compensation package more competitive; reward and retain the Eligible Employees by giving recognition to their contributions to the smooth operation and continued growth of the Maybank Group and to deliver on pay for performance to achieve a balance between retention and value creation as well as to ensure that the loss of key personnel is kept to a minimum level; and reward the Eligible Employees by allowing them to participate in our Company s profitability and eventually realise capital gains arising from any appreciation in the value of Maybank Shares. 4. USE OF PROCEEDS Our Company will not receive any proceeds from the Proposed ESGP given that the new Maybank Shares to be issued and allotted, and/or cash payment to be paid by our Company (in equivalent value of the ESGP Grant) to the ESGP Participants would not require any payment by the ESGP Participants. The estimated expenses to set up the Proposed ESGP is approximately RM0.95 million. 5. EFFECTS OF THE PROPOSED ESGP 5.1 Issued share capital The Proposed ESGP will not have an immediate effect on the issued share capital of Maybank. However, the issued share capital of Maybank will increase progressively as and when the new Maybank Shares are issued and allotted pursuant to the vesting of the ESGP Shares under the Proposed ESGP. For illustrative purpose only, assuming that all outstanding ESOS Options and RSU Shares granted are fully exercised and vested, and the Maximum ESGP Shares made available under the Proposed ESGP are fully granted and vested by the issuance of new Maybank Shares to the ESGP Participants and that there is no other increase in the issued share capital of Maybank during the ESGP Period, the proforma effect of the Proposed ESGP on the issued share capital of our Company as at the LPD are as follows: Minimum scenario (1) No. of Maybank Shares RM Maximum scenario (1) No. of Maybank Shares As at the LPD 10,193,199,917 10,193,199,917 10,193,199,917 10,193,199,917 To be issued 365,334,200 (2) 3,469,638, ,334,200 (2) 3,469,638,683 assuming pursuant to the full exercise and vesting of all outstanding ESOS Options and RSU Shares To be issued pursuant to the Proposed ESGP After the Proposed ESGP 10,558,534,117 13,662,838,600 10,558,534,117 13,662,838,600 (3) 188,172,325 (4) 1,577,354,514 (5) 791,890,058 (4) 6,638,018,411 10,746,706,442 15,240,193,114 11,350,424,175 20,300,857,011 RM 6

12 Notes: (1) Excluding treasury shares. (2) Computed based on the exercise of the ESOS Options at the respective exercise price and the vesting of the RSU Shares at a price equivalent to the 5-day VWAMP up to and including the LPD of RM per Maybank Share. (3) Computed based on 10,558,534,117 Maybank Shares after the issuance of new Maybank Shares assuming the full exercise and vesting of all outstanding ESOS Options and RSU Shares, and after deducting a total of 603,717,733 new Maybank Shares that have been/will be issued pursuant to/assuming the exercise and vesting of the ESOS Options and RSU Shares under the Existing ESS. (4) Computed based on a grant price equivalent to the 5-day VWAMP up to and including the LPD of RM per Maybank Share. (5) Computed based on 10,558,534,117 Maybank Shares after the issuance of new Maybank Shares assuming the full exercise and vesting of all outstanding ESOS Options and RSU Shares, and that the Existing ESS has expired. It should be noted that even if the Maximum ESGP Shares illustrated above are allocated to the ESGP Participants, the actual number of Maybank Shares to be issued may be less in view of the following: only ESGP Participants who meet the ESGP Vesting Conditions would be entitled to the full vesting of the ESGP Shares allocated under their ESGP Grant; and/or our Company may pay the equivalent cash value of the ESGP Grant in full or partial satisfaction of the vesting of the ESGP Shares pursuant to the Proposed ESGP. The actual number of Maybank Shares to be issued pursuant to the Proposed ESGP, as illustrated in the table above, may be higher due to a larger share base arising from Maybank Shares issued under the Proposed ESGP over the ESGP Period. 5.2 NA and gearing In the case of settlement by issuance of new Maybank Shares, the Proposed ESGP will not have an immediate effect on the consolidated NA, NA per Maybank Share and gearing of Maybank until such time as new Maybank Shares are issued in connection with the vesting of ESGP Shares. Any potential effect on the consolidated NA per Maybank Share will depend on the number of ESGP Shares vested which will only be determined at the point of vesting. In the case of settlement by cash, the Proposed ESGP will reduce the consolidated NA, NA per Maybank Share and increase the gearing of Maybank accordingly. 5.3 Earnings and EPS The extent of the effect of the Proposed ESGP on our Group s earnings and EPS cannot be determined at this juncture as it would depend on the fair value of the new Maybank Shares to be issued as at the respective ESGP Grant Dates. In accordance with the MFRS 2, the cost arising from the awarding of the ESGP Grants is required to be measured at the ESGP Grant Date and recognised as an expense over the vesting period of the ESGP Shares comprised in such ESGP Grants, which may have an effect on the future earnings of our Group. 7

13 The potential effects of the Proposed ESGP on the earnings and EPS of our Group in the future due to the recognition of the abovementioned expense cannot be determined at this juncture as they will depend on the number of ESGP Shares comprised in the ESGP Grants and other various factors which affect the fair value of the ESGP Grants. However, such expense recognised does not represent a cash outflow as it is only an accounting treatment. For the avoidance of doubt, there will be cash outflow if the vesting of ESGP Shares comprised in the ESGP Grants is fully or partly satisfied via cash. Our Board has taken note of the potential impact of MFRS 2 on the earnings of our Group and will take proactive measures to manage the earnings impact in the awarding of the ESGP Grants and/or the vesting of the ESGP Shares pursuant to the Proposed ESGP. 5.4 Substantial shareholders shareholding The Proposed ESGP is not expected to have any immediate effect on the shareholdings of our substantial shareholders. The dilution to the shareholdings of our substantial shareholders shareholdings in Maybank will depend on the number of new Maybank Shares issued and allotted to the ESGP Participants at the relevant point in time pursuant to the Proposed ESGP. For illustration purposes only, assuming that all outstanding ESOS Options and RSU Shares granted are fully exercised and vested, and the Maximum ESGP Shares made available under the Proposed ESGP are fully granted and vested by the issuance of new Maybank Shares to the ESGP Participants and that there is no other increase in the total number of issued shares of our Company during the ESGP Period, the proforma effect of the Proposed ESGP on our substantial shareholders shareholdings as at the LPD are set out in the table below: AmanahRaya Trustee Berhad (Amanah Saham Bumiputera) Employees Provident Fund Board Permodalan Nasional Berhad As at the LPD No. of Maybank Shares % Minimum scenario After assuming full exercise and vesting of all outstanding ESOS Options and RSU Shares No. of Maybank Shares % After the Proposed ESGP No. of Maybank Shares (1) % ,664, ,664, ,664, ,521, ,521, ,521, , , ,

14 AmanahRaya Trustee Berhad (Amanah Saham Bumiputera) Employees Provident Fund Board Permodalan Berhad Nasional As at the LPD No. of Maybank Shares % Maximum scenario After assuming full exercise and vesting of all outstanding ESOS Options and RSU Shares No. of Maybank Shares % After the Proposed ESGP No. of Maybank Shares (2) % ,664, ,664, ,664, ,521, ,521, ,521, , , , Notes: (1) Computed based on 10,560,814,017 Maybank Shares after the issuance of new Maybank Shares assuming the full exercise and vesting of all outstanding ESOS Options and RSU Shares, and after deducting a total of 605,544,333 new Maybank Shares that have been/will be issued pursuant to/assuming the exercise and vesting of the ESOS Options and RSU Shares under the Existing ESS. (2) Computed based on 10,560,814,017 Maybank Shares after the issuance of new Maybank Shares assuming the full exercise and vesting of all outstanding ESOS Options and RSU Shares, and that the Existing ESS has expired. 5.5 Convertible securities As at the LPD, save for the outstanding ESOS Options, our Company does not have any other convertible securities. 6. APPROVALS REQUIRED The Proposed ESGP is subject to the approvals being obtained from the following: Bursa Securities for the listing and quotation of the new Maybank Shares to be issued under the Proposed ESGP on the Main Market of Bursa Securities, which has been obtained vide its letter dated 13 March The approval from Bursa Securities is subject to the following conditions: No. Conditions imposed Status of compliance (a) (b) Maybank IB is required to submit a confirmation to Bursa Securities of full compliance of the Proposed ESGP pursuant to Paragraph 6.43(1) of the Listing Requirements and stating the effective date of implementation together with a certified true copy of the resolution passed by the shareholders in a general meeting Maybank is required to furnish Bursa Securities on a quarterly basis a summary of the total number of ESGP Shares listed as at the end of each quarter together with a detailed computation of listing fees payable To be complied To be complied (iii) (iv) Bank Negara Malaysia for the increase in the total number of issued shares of Maybank pursuant to the Proposed ESGP; our shareholders at our forthcoming EGM; and any other relevant regulatory authorities, where applicable. 9

15 7. INTERESTS OF THE DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED TO THEM Datuk Abdul Farid Alias is deemed interested in the Proposed ESGP by virtue of his eligibility for the ESGP Shares in his capacity as the Group President and Chief Executive Officer, and Non-Independent Executive Director of Maybank. Datuk Abdul Farid Alias has abstained and will continue to abstain from deliberating and voting on any subject matter pertaining to the Proposed ESGP and his allocation under the Proposed ESGP at the Board meetings and will continue to abstain from voting in respect of his direct and/or indirect shareholdings in Maybank (if any), on the resolutions pertaining to the Proposed ESGP and proposed allocation to him under the Proposed ESGP at the EGM to be convened. Further, Datuk Abdul Farid Alias has also undertaken that he shall ensure that persons connected to him will abstain from voting in respect of their direct and/or indirect shareholdings in Maybank (if any) on the resolutions approving the Proposed ESGP and proposed allocation to him under the Proposed ESGP at the EGM to be convened. As at the LPD, the direct and indirect interests of Datuk Abdul Farid Alias in our Company are as follows: Direct Indirect No. of Maybank Shares % No. of Maybank Shares % Datuk Abdul Farid Alias 237,554 *- - - Note: * Negligible. Save as disclosed above, none of the Directors, major shareholders and/or persons connected to them has any interest, direct or indirect, in the Proposed ESGP. 8. CORPORATE EXERCISE/SCHEME ANNOUNCED BUT PENDING COMPLETION Save for the Proposed ESGP and as disclosed below, there are no other corporate exercise/scheme which have been announced by our Company but pending completion as at the LPD: On 12 January 2017, our Company announced that our subsidiary, PT Bank Maybank Indonesia TBK ( Maybank Indonesia ), has on 11 January 2017 entered into a conditional shares purchase agreement ( CSPA ) with PT Reliance Capital Management ( RCM ) for the proposed disposal of Maybank Indonesia s entire equity interest of 68.55% in PT Wahana Ottomitra Multiartha TBK ( WOM Finance ) to RCM ( Proposed Disposal ). RCM is a limited liability company incorporated under Indonesian Law and has subsidiaries that provide financial services, including financial services in investment (securities and asset management), protection (general, health, life, and sharia insurance) and financing (multifinance, banking, and venture capital). The Proposed Disposal involves the sale of Maybank Indonesia s entire equity interest in WOM Finance to RCM for a total cash consideration of approximately Rupiah billion (equivalent to approximately RM million based on the exchange rate of Rupiah 1 = RM as at 11 January 2017), plus the difference between the book value of WOM Finance as set out in the audited accounts of WOM Finance for the financial year ended 31 December 2016 and the financial year ended 31 December 2015 in proportion to Maybank Indonesia s 68.55% equity interest in WOM Finance. The completion of the Proposed Disposal is expected to occur by the first quarter of 2017, upon the conditions precedent of the seller and buyer being fulfilled as prescribed in the CSPA. 10

16 WOM Finance is incorporated in Indonesia and listed on the Indonesia Stock Exchange. WOM Finance provides financing for new and used motorcycles, with the majority of consumer financing granted for well-established motorcycle brands. The Proposed Disposal is undertaken as part of Maybank Indonesia s strategic initiative to maximise its capital use and streamline its customer segmentation which will optimise its resources in the most efficient manner. WOM Finance will cease to be a subsidiary of Maybank Indonesia with effect from the completion of the Proposed Disposal. However, WOM Finance will continue to be a significant business partner of Maybank Indonesia in the future. 9. ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances and subject to your approval for the Proposed ESGP being obtained, the Proposed ESGP is expected to be implemented by the third (3 rd ) quarter of The Proposed ESGP is for a period of seven (7) years from the Effective Date. However, our Board may recommend an extension subject to the relevant approvals being obtained. 10. HISTORICAL SHARE PRICES The monthly high and low closing market prices of our Shares as traded on the Main Market of Bursa Securities for the last twelve (12) months from March 2016 up to February 2017 are as follows: High Low RM RM 2016 March April May June July August September October November December January February Last transacted market price of Maybank Shares on 26 January 2017, being the last full trading day prior to the announcement of the Proposed ESGP 8.32 Last transacted market price of Maybank Shares as at the LPD 8.17 (Source: Bloomberg) 11

17 11. DIRECTORS RECOMMENDATION Our Board (save for Datuk Abdul Farid Alias who is deemed interested in respect of the Proposed ESGP), having considered the effects and rationale of the Proposed ESGP, is of the opinion that the Proposed ESGP is in the best interest of our Company. Accordingly, our Board (save for Datuk Abdul Farid Alias who is deemed interested in respect of the Proposed ESGP) recommends that you vote in favour of the ordinary resolutions in relation to the Proposed ESGP to be tabled at the forthcoming EGM. 12. EGM The EGM will be held at the Grand Ballroom, Level 1, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, Kuala Lumpur, Malaysia on Thursday, 6 April 2017 at noon or immediately following the conclusion or adjournment (as the case may be) of the 57 th Annual General Meeting of our Company scheduled to be held at the same venue and on the same date at a.m., whichever is later, for the purpose of considering and if thought fit, passing the resolutions pertaining to the Proposed ESGP. You are advised to refer to the Notice of EGM and Form of Proxy which are enclosed in this Circular. If you are unable to attend and vote in person at the EGM, you may appoint a proxy or proxies to attend and vote on your behalf. If you wish to do so, you should complete and deposit the Form of Proxy at the office of our appointed share registrar for the EGM, Tricor Investor & Issuing House Services Sdn Bhd, at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, Kuala Lumpur, Malaysia or its Customer Service Centre at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, Kuala Lumpur, Malaysia no later than Wednesday, 5 April 2017 at noon. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the EGM should you subsequently wish to do so. 13. FURTHER INFORMATION You are advised to refer to the attached appendices for further information. Yours faithfully For and on behalf of the Board of Directors of MALAYAN BANKING BERHAD TAN SRI DATO MEGAT ZAHARUDDIN MEGAT MOHD NOR Chairman 12

18 APPENDIX I SUMMARY INFORMATION ON THE EXISTING ESS The Existing ESS consists of the Employee Share Option Scheme ( ESOS ) and the Performance- Based Restricted Share Unit ( RSU ). Under the ESOS award, Maybank may from time to time within the offer period, offer a certain number of options ( ESOS Options ) to eligible employees at an offer date. Subject to acceptance, the participants will be granted the ESOS Options which can then be exercised within a period of five (5) years to subscribe for fully paid-up Maybank Shares, provided that all the conditions (including performance-related conditions) are duly and fully satisfied. Under the RSU award, Maybank may from time to time within the offer period, invite selected participants to enter into an agreement with Maybank, whereupon Maybank shall agree to award Maybank Shares ( RSU Shares ) to the participants, subject to fulfilling the relevant service and performance objectives and provided that all performance-related conditions are duly and fully satisfied. The RSU Shares will only vest based on a three-years cliff vesting schedule or a two-years cliff vesting schedule in the case of a supplemental RSU award, provided all the RSU vesting conditions are fully and duly satisfied. A summary of the salient features of the Existing ESS is set out below: Implementation date : 23 June 2011 Duration of the scheme : Seven (7) years Expiry date : 23 June 2018 Eligible employees : Employees and/or Executive Director(s) of Maybank Group including the top management and selected key eligible personnel of PT Bank Maybank Indonesia Tbk who are selected to be eligible to participate in the Existing ESS on terms set out in the by laws governing the Existing ESS Maximum number of Maybank Shares which may be issued under the scheme : Such number of Maybank Shares representing 10% of the total number of issued shares of Maybank (excluding treasury shares) at any one time Number of ESOS Options granted : As at the LPD Eligible employees (including directors) Directors No. of ESOS Options granted 624,386,300 4,910,000 No. of ESOS Options vested 527,194,400 3,176,000 No. of ESOS Options vested 527,194,400 3,176,000 No. of ESOS Options exercised 172,366,400 1,375,000 No. of ESOS Options lapsed 46,667, ,000 No. of ESOS Options vested but 308,160,700 1,601,000 not exercised or lapsed No. of outstanding ESOS Options (projected but not yet vested) 46,134, ,000 Number of RSU Shares granted : As at the LPD Eligible employees (including directors) Directors No. of RSU Shares granted 25,998,733 1,225,000 No. of RSU Shares vested 9,491, ,393 No. of outstanding RSU 11,039, ,000 Shares pending vesting 13

19 APPENDIX I SUMMARY INFORMATION ON THE EXISTING ESS (Cont d) Maximum allocation to directors and senior management Actual allocation to directors and senior management : 50% of the total Maybank Shares available under the Existing ESS : As at the LPD, ESOS Options and RSU Shares representing 20.17% of the total Maybank Shares available under the Existing ESS have been granted to the directors and senior management since the commencement of the Existing ESS [The rest of this page is intentionally left blank] 14

20 APPENDIX II DRAFT BY-LAWS DEFINITIONS (a) In these By-Laws, except where the context otherwise requires, the following expressions shall have the following meanings: Adviser : A corporate finance adviser that may act as a principal adviser under the Securities Commission Malaysia s Guidelines on Principal Advisers for Corporate Proposals (as amended from time to time) Board : The Board of Directors of Maybank Bursa Depository : Bursa Malaysia Depository Sdn Bhd ( W) Bursa Securities : Bursa Malaysia Securities Berhad ( W) By-Laws : By-Laws governing the Scheme as amended, modified and/or supplemented from time to time CDS : The Central Depository System governed under SICDA CDS Account : The account established by Bursa Depository for a depositor for the recording of deposit of securities and dealings in such securities by that depositor of securities Companies Act : Companies Act, 2016 as amended from time to time Constitution : Constitution of the Company (currently referred to as the Memorandum and Articles of Association of the Company) Director : A natural person being a director in Maybank Group Effective Date : The date this Scheme takes effect which will be on a date of full compliance with the relevant requirements of the Listing Requirements and other conditions set out in By-law 8.1 and shall be determined by the ESGP Committee Eligible Employees : Employees and/or Executive Director(s) of Participating Maybank Group who fulfill the criteria of eligibility to participate in the Scheme on terms set out in these By-Laws and include any person who is proposed to be employed/engaged/appointed as an employee of the Maybank Group ESGP or Scheme : The Employees Share Grant Plan of the Maybank Group set up under and governed by these By-Laws ESGP Award : The ESGP share award referred to in By-Law

21 APPENDIX II DRAFT BY-LAWS (Cont d) ESGP Committee : The committee comprising Directors and/or executive(s) appointed by the Board pursuant to By- Law 10 to implement and administer the Scheme in accordance with these By-Laws ESGP Agreement : An agreement arising between an ESGP Participant and the Company upon acceptance of the ESGP Grant by Selected Employee(s) pursuant to these By- Laws ESGP Grant or Grant : An offer made by the ESGP Committee to Eligible Employee(s) to enter into the ESGP Agreement(s) as set out in By-Law 30 and where the context permits, shall include any Supplemental ESGP Grant referred to in By-Law 30.5 ESGP Grant Date : The date on which an ESGP Grant is made or deemed made by the ESGP Committee to a Selected Employee which shall not be later than the last day of the ESGP Grant Period during which the ESGP Grant can be accepted by the Selected Employee in accordance with By-Law 30 ESGP Grant Period : The period of thirty (30) days from the date of the ESGP Grant or such other period as may be determined by the ESGP Committee to an Eligible Employee in accordance with the By-Laws for the acceptance of the ESGP Grant ESGP Participant : A Selected Employee who has duly accepted a ESGP Grant in accordance with these By-Laws ESGP Shares : Shares to be issued pursuant to the Proposed ESGP. ESGP Vesting Conditions : The conditions determined by the ESGP Committee and stipulated in the ESGP Agreement in respect of an ESGP Award which must be fulfilled for the ESGP Shares to be vested in an ESGP Participant, including those set out in By-Law 35 ESGP Vesting Date : The date on which ESGP Shares granted pursuant to an ESGP Award are vested in the ESGP Participant ESGP Vesting Price : The reference price (based on the fair value at ESGP Vesting Date) which is used to determine the cash settlement amount to be paid to an ESGP Participant under the ESGP Award in the event the Company elects to settle the vesting of the ESGP Shares in cash Executive Director : A Director holding office in an executive capacity who is involved in the day-to-day management and is on the payroll of Maybank Group GPCEO : Group President and Chief Executive Officer Listing Requirements : The Main Market Listing Requirements of Bursa Securities Maybank or Company : Malayan Banking Berhad (3813-K) 16