KUALA LUMPUR: A $20bn merger to create Malaysia’s biggest bank is about to collapse after CIMB Holdings and RHB Capital failed to agree on new deal terms, people familiar with the matter said yesterday.
The merger of CIMB, RHB and Malaysian Building Society Bhd (MBSB) would have formed a banking group with assets of about $190bn, eclipsing Malayan Banking Bhd (Maybank) and making it southeast Asia’s fourth-biggest bank.
The state-backed deal was part of Malaysia’s ambitious plan to promote its firms as regional champions.
The collapse of the deal would be a major blow for CIMB Chairman Nazir Razak, brother of Malaysian Prime Minister Najib Razak. Nazir has spearheaded the bank’s expansion over the past 16 years, snapping up a domestic rival, lenders in Indonesia and Thailand and businesses owned by Royal Bank of Scotland.
All three firms said in separate stock market filings that talks were ongoing. CIMB and MBSB said they would have board meetings today to discuss the merger.
“Should there be any material development on the proposed merger which warrants disclosure, the appropriate announcement will be made on Bursa Securities accordingly,” CIMB said.
However, two people familiar with the matter said an announcement cancelling the deal could come as early as today evening, after the CIMB board meeting.
CIMB shares had tumbled more than 26 percent between the launch of the deal in early October and Monday, as investors questioned CIMB’s ability to extract synergies from the deal. “We have been cautious on the mega-merger proposal, especially on synergy creation vis-a-vis the high merger cost,” Tan Ei Leen, analyst with Kuala Lumpur-based Affin Hwang Capital, wrote in a note to clients on Monday.
The CIMB share price fall reduced the deal’s appeal, prompting RHB to seek an improved share swap ratio, and possibly cash, people familiar the with the situation said.
Reuters
