RHB Capital Bhd., Malaysia’s fifth-biggest banking group by assets, has sought central bank approval to begin negotiations with OSK Holdings Bhd. to combine their investment banking businesses, the company said.
Both companies have “complementary business and market segments,” Kellee Kam Chee Khiong, chief executive officer of RHB Capital, said in a text message to Bloomberg today. OSK can give RHB a “regional platform across key markets,” he said.
A merger with OSK would strengthen RHB’s stock broking business three months after separate merger talks with Malayan Banking Bhd. and CIMB Group Holdings Bhd., the country’s two largest banks, collapsed. RHB had said then that it would focus on its own growth strategies after Maybank and CIMB called off negotiations.
OSK Investment Bank Bhd., a unit of OSK Holdings, is Malaysia’s fourth-biggest stockbroker by trading value this year, while RHB Investment Bank Bhd. ranked third, according to stock exchange data. RHB and OSK combined would allow the enlarged group to overtake CIMB Investment Bank Bhd. as the country’s top equity broker.
Shares of OSK Holdings climbed 12 percent to 1.56 ringgit at the 5 p.m. close in Kuala Lumpur, their biggest gain since November, following yesterday’s announcement. RHB fell 2.2 percent to 7 ringgit.
Central bank approval is required in Malaysia before merger negotiations between financial institutions can start.
“News on RHB’s potential merger talks with OSK surprised us,” Winson Ng Gia Yann, an analyst with CIMB Group Holdings Bhd., wrote in a report today. “It would be positive in the longer term as it would give RHB Capital a regional presence and boost its domestic retail broking business.”
Maybank and CIMB scrapped rival talks to acquire RHB in June after Abu Dhabi’s Aabar Investments PJSC paid 10.80 ringgit a share for a 24.9 percent stake in RHB, pushing up the potential takeover price.