By MOHAMAD AZLAN JAAFAR
AMMB Holdings Bhd (AmBank) will commence negotiations for a possible merger with RHB Bank Bhd, according to a source.
The source close to the matter told The Malaysian Reserve that AmBank will seek permission from Bank Negara Malaysia to commence discussions with RHB.
It is not known how long the negotiations will take, but success will depend on the complexity of the deal — especially in terms of the benefits for shareholders and valuation.
Yesterday, both AmBank and RHB had asked for the suspension of trading of their shares today (June 1), pending a material announcement by the companies.
Speculation over an AmBank-RHB merger had been rife in last few months.
If it materialises, the combined AmBank- RHB entity will create the fourth-largest banking group based on assets.
Shares of AmBank were 2.16% higher at RM5.12 at the close of yesterday’s trading, valuing the company at RM15.7 billion.
RHB’s stock ended the day’s trading one sen higher to close at RM5.39, putting the tag on the Employees Provident Fund-majority owned lender at RM21.6 billion.
AmBank recorded a pretax profit RM1.8 billion for the financial year ended March 31, 2017, compared to RM1.73 billion recorded a year ago.
For the fourth-quarter ended March 31 this year (4Q17), AmBank’s earnings rose to RM335 million compared to RM280 mil- lion a year ago.
For the period under review, the bank’s assets stood at RM134.7billion.
RHB registered a profit of RM500 million for the 1Q17, down from RM564 million posted a year ago.
Its total asset was RM233.5 billion at the end of March 2017.
The combined entity — if the deal goes through — will have a total asset of RM367 billion, slightly lower than Public Bank Bhd’s RM389.7 billion assets, according to the latest quarterly filing by all the lenders.
The proposed merger between the two lenders would be the biggest in recent history, after the collapse of the three-way merger between CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd in January 2015.
The parties cited unfavourable economic conditions and the failure to “arrive at a value-creating transaction for all stakeholders” as the reasons for the collapse of the proposed merger.
The merger between the three lenders would have created a mega Islamic bank. Australia and New Zealand Banking Group Ltd (ANZ) — which has a 23.7% interest in AmBank — had made known its intention to exit Malaysia’s banking sector.
The AmBank-RHB merger could be the exit route for ANZ, if the deal materialises.
Tan Sri Azman Hashim owns a 12.97% interest in AmBank, according to Bloomberg data.
Azman had already announced his intention to retire as chairman and board member of six entities in AmBank Group over the next two years. — TMR