DBS Group Holdings Ltd made the decision after failing to get approval from the Malaysian central bank for its initial request, which would’ve required a waiver because generally a company can only buy as much as 30% of a financial institution in the country, the people said.

“The revised request should have a better chance of being approved by Bank Negara Malaysia,” the people said, asking not to be identified because the information is private.

“That would pave the way for DBS to engage with Alliance’s largest shareholder, Vertical Theme Sdn Bhd, a Malaysian holding company backed by Singapore state investor Temasek Holdings Pte Ltd,” the people said.

Temasek has a 49% stake in Vertical Theme via Duxton Investment & Development Pte Ltd. It also holds about 28.3% of DBS.

Representatives for DBS and Vertical Theme declined to comment.

A spokesman for Alliance said the company wasn’t aware of the matter, while the Malaysian central bank didn’t immediately respond to a request for comment.

An Alliance deal would give DBS a footprint in Malaysia, where Singaporean rivals Oversea-Chinese Banking Corp and United Overseas Bank Ltd already have a presence.

DBS is Southeast Asia’s largest bank by total assets.

Alliance’s shares have fallen 6% in Kuala Lumpur this year, while the city’s main benchmark is down less than 2%.

Alliance has a market capitalisation of about RM7.7 billion (US$1.9 billion).