CIMB-RHB-MBSB: mega merger aborted?

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Malaysia’s biggest deal, a three-way bank merger, is reported to be called off some six months after it was proposed, local media reported, citing sources.

The deal is likely to fall through as the bigger parties in the merger, CIMB Group Holdings Bhd and RHB Capital Bhd, are believed to have failed to agree on the new deal terms.

An official announcement is expected within this week as board members are said to be meeting this Wednesday to iron out the matter, the Edge Financial Daily reported.

Reuters earlier reported that RHB Capital Bhd was seeking new terms for share exchange, and possibly cash, as CIMB’s share price had plummeted 26 per cent since the merger was proposed.

The original terms was for RHB Capital to issue shares to acquire CIMB in a reverse merger. It was viewed as an attempt to get around possible opposition from Aabar Investments PJSC, RHB Capital’s second-largest shareholder.

The merger between CIMB, RHB Capital and Malaysian Building Society Bhd (MBSB) to create a mega banking group was first proposed on July 10, 2014, with a formal application made to the central bank of Malaysia, Bank Negara, on October 9 for approval.

The merger would have formed Malaysia’s largest banking group, with assets worth $190 million, overtaking the current largest financial group in Malaysia, Malayan Banking Bhd. By that measure, it would have also been Southeast Asia’s fourth largest bank.

The state-backed deal was part of Malaysia’s ambitious plan to promote its banking firms as regional champions.

Bank Negara governor Dr Zeti Akhtar Aziz has been long supportive of the notion of a mega bank in Malaysia, citing the need to facilitate cross-border financial flows for international trade.

When commenting on the merger in September last year, she noted that “we do not want a mega bank for the sake of a mega bank (but) the country needs a mega bank because small financial institutions will only focus on domestic business”.

Both CIMB and MBSB have declined to comment.

RHB Capital said in a statement: “There is no further development in relation to the merger at this juncture. Further updates will be made should there be any development.”

In response to the news, CIMB’s counter rose 14.29 per cent or 74 sen to close at MYR5.92 today. Trade volume was 29.2 million shares.

RHB Capital also closed the day’s trade positively at MYR7.80, barely 1 per cent higher on a trading volume of 6.46 million shares.

On the contrary, property and personal loans provider MBSB fell 5.94 per cent or 13 sen, to close at MYR2.06 on a trading volume of 34. 23 million.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.