Bank Consolidation Play As Malaysian Lenders Get Green Light To Enter M&A Talks

Tom Burroughes

6 June 2017

Two of Malaysia’s main banks, and AMMB Holdings (aka AmBank) have embarked on merger talks that will create an entity value at around $9 billion if it succeeds.
Both banks offer wealth management as part of their service offerings.

Approval from Bank Negara Malaysia, the central bank, “has been obtained for the two parties to commence discussions for a proposed merger between AmBank Group and RHB Banking Group”, according to a joint statement issued late last week. “Following the aforementioned approval by BNM, both parties have entered into an exclusivity agreement to negotiate and finalise terms and conditions of the proposed merger for submission to the relevant regulatory authorities,” the banks said in a joint statement.

“This new chapter that is opening in the AmBank Group’s history, comes at an opportune time for us as we have been moving closer to achieving our top four goals. I am positive that the proposed merger with RHB Banking Group will create a stronger business and financial presence. Our combined strength in key business segments particularly in retail and investment banking will bode well for us as we move forward to achieve our goal of becoming a formidable banking group,” Dato’ Sulaiman Mohd Tahir, group chief executive, , said.

“We are confident that if the proposed merger takes place, it will create greater synergy for the enlarged banking group, benefiting our shareholders, customers, employees and all other stakeholders. A merger of RHB Banking Group and AmBank Group will create a stronger fourth largest banking group, creating scale and market leadership across key business segments,” Dato’ Khairussaleh Ramli, Group Managing Director for RHB Banking Group.

After the announcement, trading in the banks’ shares resumed on Friday last week.

Media noted that such a merger will bolster RHB's status as the fourth largest Malaysian bank by assets behind Maybank, CIMB Group Holdings and Public Bank. AmBank is currently the country's sixth biggest bank (Reuters). The news wire said RHB would be the acquirer in the potential merger. AmBank has a market capitalisation of US$3.66 billion, while RHB has a market value of about US$5 billion.