The Federal Government is facing mounting consternation over the proposed merger of CIMB Bank, RHB Bank and Malaysian Building Society Bhd (MBSB), which would form the country’s largest banking group.
The loudest voices against the merger? The government of Abu Dhabi, Malaysia’s banking union, and senior UMNO members, according to a report by The Malaysian Insider.
The government of Abu Dhabi, which currently owns 21.4% of RHB Bank, allegedly sent a special envoy to Putrajaya to insist that RHB shares be traded at market prices. Abu Dhabi Aabar Investments PJS, which holds the RHB shares, will not agree to any deal trading RHB shares at below RM12 – the price Aabar paid per share when it acquired the RHB stock from the Abu Dhabi Commercial Bank in 2011.
The Gulf country is also not happy with the 90-day exclusivity period granted to CIMB Bank, whose group CEO is Prime Minister Datuk Seri Najib Tun Razak’s brother Datuk Seri Nazir Tun Razak, to negotiate the merger.
Abu Dhabi might also reconsider its multi-billion ringgit oil storage programme in the Petronas Rapid project in Johor if the mega-bank merger proceeds without considering the country’s interests.
The National Union of Bank Employees (NUBE), through its president Tan Eng Hong, expressed disappointment in the planned merger, telling Bank Negara last week that it foresees impending job cuts, such as what banking employees had experienced during previous bank mergers in Malaysia.
Even influential senior UMNO members are worried that the planned merger might be bad for the party’s image, already tainted with allegations of nepotism and corruption. Some have opined that it would have been better for RHB Bank and MBSB were to be absorbed by state-owned Malayan Banking Berhad (Maybank), rather than a smaller bank headed by the Prime Minister’s brother.
Should the merger come to pass, the Employees Provident Fund (EPF), the federal government’s pension agency, would come out as the major stakeholder if the merger comes to fruition, owning 25% of the resulting mega-bank. As it is, the EPF owns 14.5% of CIMB stock, 41.3% of CIMB Capital, and 65% of Malaysia Building Society.
See Also:
CIMB, RHB and Malaysia Building Society are merging into Malaysia’s biggest mega-bank
Reader Interactions