By Chan Quan Min
CIMB Group Holdings Bhd, Malaysia Building Society Bhd (MBSB) and RHB Capital Bhd are expected to make an announcement later today on a proposed merger that would create the country’s largest financial group.
Banking sources say that while the negotiations are “still premature,” the three-way union is likely to take the form of a “true merger” as opposed to a takeover of smaller MBSB and RHB by much larger CIMB.
“Everyone will have a stake in the new entity,” a source told KiniBiz, suggesting that the merger could take place via share swap.
CIMB, MBSB and RHB are related through a common shareholder in the Employees Provident Fund (EPF). The public pension fund holds a 16% stake in CIMB, 65% of MBSB and 41% of RHB.
State investment holding company Khazanah Nasional has a 30% stake in CIMB, currently Malaysia’s second largest bank by assets size.
Given that the EPF has a controlling stake in both MBSB and RHB, the merger negotiations are believed to involve CIMB, the EPF and Khazanah for the most part.
All three parties have applied for Bank Negara approval to continue with the negotiations. The central bank could give their preliminary reply as soon as today.
In terms of asset size, CIMB is much larger than even MBSB and RHB combined. CIMB has total assets of RM371 billion, whereas MBSB and RHB combined have total assets of only RM226 billion, as at the end of last year.
Together, all three financial services firms will result in the formation of the country’s biggest banking group worth about RM597 billion, larger even than the current leader Maybank which has assets of about RM560 billion.
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