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Malaysia's RHB Cap, CIMB responding well to merger idea

Publication Date : 14-08-2014

 

CIMB Group chief executive Nazir Razak, who is one of the key drivers of a mega-merger involving the bank with RHB Capital Bhd (RHB Cap) and Malaysia Building Society Bhd (MBSB), says that so far, the management of both banks have received the idea well.

“The management teams are going through details on the business aspects. That’s the biggest hurdle and that’s the priority. All management teams have warmed to the idea that we can create a value enhancing merger for all parties.

“Of course, it is still early days but the momentum is there. I’m optimistic that we can come up with a proposal for consideration by the various boards and ultimately shareholders,” Nazir said.

He also urged shareholders to wait for the details of the proposed merger before making a decision.

“The proposal is not out yet for shareholders to consider, so I would urge everyone to wait for the details before coming to any conclusion.

"Any shareholder for that matter, should wait for the details before taking a position on it,” he added when asked to comment on reports that Aabar Investments PJSC, a major shareholder in RHB Cap, was critical of the deal.

“It’s something that we hope everyone would see creates value for them. Otherwise, they would have a right to disagree. That will be a fair process,” Nazir said.

Last month, CIMB obtained approval from Central Bank to negotiate with RHB Cap and MBSB on a potential merger and the creation of a mega-Islamic bank. The three parties have entered into a 90-day exclusivity agreement for a proposed merger.

The Employees Provident Fund (EPF) is a key player in the proposed merger, as it is the largest shareholder of RHB Cap with a 40.76 per cent stake and also holds 14.46 per cent in CIMB. RHB Cap wholly owns RHB Bank.

Nazir said it was not within his remit when asked if the EPF could vote for the deal.

He also hinted that the mega-merger could be a pure share merger.

“That could be a pure share merger, for instance. Should not assume to have any funding,” Nazir said when asked on its funding for the merger.

Nazir said its discussions on the potential merger have not yet reached the pricing stage and the management teams were currently going through the details.

Meanwhile, Nazir said CIMB’s succession plan was still ongoing and would not be postponed despite the impending mega-merger. However, he did not name any CEO. He will be joining Khazanah Nasional Bhd.

Nazir announced last month that he would be stepping down from his post as group CEO to resume as the bank’s chairman from September.

He said the leadership of the new entity would be decided by the relevant shareholders.

“When you merge, what happens is that there will be new stakeholders. They’ll have to decide who will lead the new entity. That’s down the road,” he said.

Nazir said the group’s priority and focus would be on the merger and it would not be finalising any deal with banks in the Philippines this year.

 

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