Southern Bank (SB) has dropped its plans to acquire fellow Malaysian firm Asia General, an insurance provider. The move reopens the battle for Asia General, which has been on the market since last year and has attracted interest from other quarters, including the Singapore investment company Temasek.

Meanwhile, news reports from the region suggest that the end of SB’s attempts to buy Asia General could in turn facilitate the takeover of SB itself. Observers in the region believe that the collapse of the Asia General deal could see Bumiputra-Commerce launching an effort to acquire SB.

SB said that its efforts to acquire Asia General lapsed because it could not meet the conditions imposed by the Malaysian central bank within an acceptable timeframe. The central bank was concerned that SB may have trouble swallowing the insurance firm, given its status as one of Malaysia’s smaller banks.