AmBank to confirm merger status by September

by NG MIN SHEN / Pic by AFIF ABD HALIM

AMMB Holdings Bhd (AmBank) expects to con rm the status of its proposed merger with RHB Bank Bhd by early September this year.

AmBank group CEO Datuk Sulaiman Mohd Tahir (pic) said the banks are currently in the negotiation stage.

“We expect to confirm that we’re proceeding with the merger — to come back to the authorities and regulators — by late August or early September 2017.

“If everything goes well, then we will seek regulatory approval to seriously consider merging the two entities and go into detailed discussions,” he told a media briefing after the group’s AGM in Kuala Lumpur yesterday.

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 then 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.

According to Sulaiman, BNM has given the two parties up until end-December this year to negotiate the deal. “The exclusive rights to discuss with RHB will last until Aug 30. After that, it is open for both partners to talk to others as we have until end-December to discuss things.

“If we can negotiate well and iron things out with RHB, then we should be able to come back to the market by late August or early September,” he said.

Should the merger take place, it will create the fourth-largest banking group in the country by assets, thus helping AmBank to achieve its 2020 target of being one of the nation’s top four banks.

RHB is currently the fourth-largest bank in the country by assets, while AmBank places sixth. If the two are successfully combined, the new entity is expected to have an asset value of RM368.29 billion, slightly behind Public Bank Bhd’s RM389.7 billion.

Sulaiman said the proposed merger will also be complementary for both entities, allowing them to leverage on economies of scale, while looking at ways to drive regional expansion.

“RHB has exposure in nine countries, while AmBank does not have an overseas presence. Combined, in terms of fund management, we should be the largest out there.

“We would also be close to No 1 or 2 in investment banking, and within the top three or four for retail and business banking. For Islamic banking, combined we would clearly be No 2 — just slightly below Malayan Banking Bhd,” he said.

The banking group is not ruling out a reduction in staff headcounts, although a job rationalisation exercise is in consideration whether or not the merger takes place.

“It’s too early to tell if there will be job losses as a result of the merger, but it is certainly something that you do.

“Even if we decide to do a headcount cut like any other bank, it will be done through a mutual separation scheme, so there is a process to go through. We don’t do (job cuts) just like that,” Sulaiman said.

He added that the lender is always looking at opportunities to revisit its processes and find optimum ways to manage costs.

“It’s not about job cuts, but more about redeployment in areas where we need people to be — perhaps on the frontlines. We give opportunity to people to move into new job scopes as a result of changes in the environment and customer expectations.

“We’re looking at it even if we don’t merge,” Sulaiman said.

The proposed merged entity will have an estimated headcount of 25,000 staff and a network of some 383 branches.

Industry experts have noted that this would require a thorough assessment and likely a staff cut of up to 18% of the 25,000 in order to extract cost synergies from the enlarged group.