RHB-AmBank merger positive for all, says AmBank founder

by NG MIN SHEN

THE proposed merger between RHB Bank Bhd and AMMB Holdings Bhd (AmBank) is positive for all parties involved as well as the sector at large, according to AmBank Group founder and chairman Tan Sri Azman Hashim.

“I think the merger is a good thing for everybody. It is good for the banks involved as it makes them stronger, and good for the industry too. I think it’s a win-win situation,” he said.

Speaking to reporters on the sidelines of the official “Azman Hashim — International Islamic University of Malaysia (IIUM) Ummatic Scholarship Award ceremony” in Kuala Lumpur yesterday, Azman viewed the union of RHB and AmBank’s different business segments in a positive light.

“It is good because (the businesses are) complementary, so we fill in the gaps. Certainly there will be advantages in synergies — you have bigger capacity and reach, so it’s more competitive,” he said.

AmBank had announced last year that it aimed to become one of the top four banks in the country by 2020.

Currently, it ranks sixth by assets among the eight banking groups in Malaysia, while RHB is placed fourth.

“There is an advantage of having size. We were targeting to be No 4 in four years, and that takes time. But this way, we are immediately No 4 and it creates a lot of advantages,” Azman stated.

RHB and AmBank announced on June 1 this year that they had received approval from Bank Negara Malaysia (BNM) to begin talks for a proposed merger.

The two banking groups have entered into an exclusivity agreement expiring on Aug 30, 2017, to negotiate and finalise the terms and conditions of the proposed merger for submission to the relevant regulatory authorities.

On whether the timeline to conclude merger talks is too tight, Azman, who holds a 12.97% stake in AmBank Group, said: “I think it should be okay.”

He declined to comment when pressed further on the direction of the proposed merged entity, as well as to whether staff headcount would be reduced.

“First of all, we need to get the merger going. Those things are future things. We don’t know how the shape will be. It’s too early to say,” he said.

A successful deal between the two lenders will create the nation’s fourth-largest financial group by assets with an estimated total asset value of RM367 billion, slightly lower than Public Bank Bhd’s assets of RM389.7 billion, as per the latest quarterly filings by the parties.

Industry experts said its strong points would likely be in investment banking, asset management, stockbroking by trade value, general insurance — excluding takaful and Islamic banking.

The proposed merger has also renewed talk of further consolidation within the banking sector, which has not had the best track record in mergers and acquisitions.

Azman said consolidation, which is an ongoing process, is also driven by market forces, which could be attractive to smaller banks.

“The top two or three banks are okay, but if we merge we become number four. The rest have to consider if they want to remain the same size or (be) bigger.

“Consolidation is driven by market forces too. I imagine there is still room for more mergers,” Azman added.

Next in line appears to be Malaysia Building Society Bhd (MBSB), which told Bursa Malaysia yesterday that it had submitted an application to BNM for approval for a proposed merger with Asian Finance Bank Bhd (AFB).

Prior to its discussion with AFB, MBSB had unsuccessfully attempted to merge with Bank Muamalat Bhd to create the largest stand-alone Islamic bank in the country.

It was also part of a planned threeway RM85.77 billion merger in 2014 with RHB and CIMB Group Holdings Bhd, which fell through after the parties failed to agree on the terms.

Meanwhile, Azman, a veteran of the domestic banking industry, said the outlook on the financial services sector appears to be upbeat.

“Growth in the last quarter was good, hopefully it can be sustained. Even if it is not sustainable, people are already projecting 5% economic growth for the year, which is better than previously. For banks, if the (economic) growth is there we are ok — it should be better than last year,” he said.