The chairperson of Malaysia's Southern Bank Berhad, Syed Mohamad Yusof Syed Nasir, has resigned amid a possible merger with the government's Bumiputera-Commerce Holdings Berhad, a report said today.

Syed Mohamad tendered his resignation to the bank's chief executive officer Tan Teong Hean yesterday, the Star said, quoting unnamed sources.

No announcement has yet been made by the bank and officials were not reachable for comment.

But the relationship between Syed Mohamad and Tan has reportedly been strained after the chairperson, along with Selangor Sultan Sharafuddin Idris Shah, in October offered to sell their stake to CIMB, a unit of Bumiputera-Commerce Holdings Berhad.

Both men are major shareholders in SBB and the newspaper said Syed Mohamad had met with Sharafuddin late Friday to explain his move.

"He met (Sharafuddin) for more than an hour to explain the circumstances of his decision to quit," a source was quoted as saying by the newspaper.

CIMB in October obtained approval from Malaysia's central bank to begin discussions for the possible merger.

Evaluate merger proposals

At the same time, Sharafuddin and Syed Mohamad said they had received permission to negotiate with CIMB over their stakes.

The moves appeared to take chief executive Tan by suprise, with the bank saying it was not considering any merger proposals amidst an aggressive share buyback.

SBB later said on November 11 it would "evaluate all credible merger proposals" but said any plan would have to be "consistent with the bank's overall value creation strategy".

The bank is considered one of Malaysia's more successful niche lenders, with a focus on consumer finance and small and medium enterprise banking.

SBB has moved to acquire Singapore insurer Asia General Holdings Limited and will be seeking shareholder approval at an extraordinary general meeting on December 12.