After months of manouvering and some political wrangling, the deed is finally done: CIMB Group Holdings is set to own 70% of a new mega-bank comprising of itself, the RHB Capital Group and the Malaysia Building Society Bhd (MBSB).
“The merger will see a share swap between CIMB Group and RHB Capital at an exchange ratio of 1.38 (one RHB Capital share for 1.38 CIMB Group share).
“This is based on a benchmark price of RM7.27 per CIMB Group share and RM10.03 per RHB Capital share; translating into price-to-book ratios as at 30 June 2014 of 1.70 times and 1.44 times for CIMB Group and RHB Capital respectively,” the three institutions said yesterday in a joint statement.
The merger, should it receive Bank Negara approval, would result in the biggest banking group in the country, outstripping long-time market leader Malayan Banking Bhd (Maybank).
The new mega-bank is also planning to be a major Asean player, and a driving force for Islamic banking in the region.
“This exercise will cement CIMB Group’s position amongst the top banks in Asean and bring a host of value creation opportunities for all our stakeholders. We are excited that we can now move forward and work towards seeking the necessary approvals to effect this merger,” said CIMB Grou acting CEO Tengku Zafrul Tengku Abdul Aziz, as quoted by The Star Online‘s Joseph Chin.
The next step for the three banks will be to move towards a concrete sale and purchase agreement in early 2015.
The merger has not been without its share of detractors. The government of Abu Dhabi raised concerns over its own holdings in RHB in July, and insisted to have control over the sale price of RHB’s shares.
The National Union of Bank Employees (NUBE) also expressed its worry that a merger would result in massive job cuts for its members.
Lastly, senior members of the ruling UMNO party are worried that CIMB’s bold moves might backfire on the image of the party, seeing as how CIMB is headed by Prime Minister Najib Razak’s brother Nazir Razak.
See Also:
CIMB, RHB and Malaysia Building Society are merging into Malaysia’s biggest mega-bank
Federal Government under scrutiny over CIMB-RHB-MBSB megabank merger
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