Maybank Plans to Make RHB Takeover Proposal by End of June

Malayan Banking Bhd. (MAY), Malaysia’s biggest lender, will present a proposal to acquire rival RHB Capital Bhd. by the end of the month, its chairman said.

“An acquisition would give us scale,” Malayan Banking Chairman Megat Zaharuddin Megat Mohd Nor told reporters in Kuala Lumpur today. “You need scale to compete. Not only the incumbent Southeast Asian players are trying to grow their business here, we have global players from other parts of the world that are focusing in this part of the world.”

Malayan Banking, or Maybank, and its biggest local rival CIMB Group Holdings Bhd. (CIMB) last month won approval from the country’s central bank to begin competing merger talks with RHB Capital Bhd. (RHBC) to potentially create Southeast Asia’s biggest lender by market value. The combined capitalization of Maybank and RHB would be $28.6 billion, based on today’s share prices at the 12:30 p.m. trading break, exceeding Singapore’s DBS Group Holdings Ltd. (DBS)

Kuala Lumpur-based Maybank will only proceed with the acquisition if it adds to earnings, Megat Zaharuddin said. It would be “disciplined” not to overpay, Chief Executive Officer Abdul Wahid Omar said.

Malaysia’s two biggest banks are seeking the acquisition to expand amid rising competition as the central bank grants more licenses to international players including Bank of China Ltd. Hong Leong Bank Bhd. (HLBK) last month bought EON Capital Bhd., while ECM Libra Financial Group Bhd. is said to have appointed an adviser to find a buyer.

RHB was last month overtaken as Malaysia’s fourth-biggest lender by assets following Hong Leong’s purchase of EON. RHB has financial service operations including a branch network, treasury, investment banking and Islamic finance.

Maybank fell 0.7 percent to 8.72 ringgit as at 3:58 p.m. in Kuala Lumpur trading, tracking a 0.6 percent drop in the benchmark FTSE Bursa Malaysia KLCI Index. RHB Capital was 0.6 percent lower at 9.84 ringgit, while CIMB was unchanged.

Abu Dhabi Commercial Bank PJSC (ADCB), which owns 25 percent stake of RHB’s shares, yesterday announced it won Malaysian central bank approval to begin talks to sell its interest to Abu Dhabi government-owned Aabar Investments PJSC.

To contact the reporter on this story: Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net

To contact the editor responsible for this story: Barry Porter in Kuala Lumpur at bporter10@bloomberg.net

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