This article first appeared in The Edge Financial Daily on June 1, 2017
PETALING JAYA: RHB Bank Bhd and AMMB Holdings Bhd, both of which have suspended the trading of their shares on Bursa Malaysia today, are expected to announce that the duo are keen on exploring a merger, sources said.
Should the two banking groups merge, this will strengthen RHB Bank’s current position as the country’s fourth-largest banking group, in terms of assets.
As it stands now, RHB is already the fourth-largest lender among the eight domestic banking groups, and AMMB, the sixth.
AMMB scheduled an analyst results briefing yesterday. But it was cancelled at the eleventh hour. “We had dialled in and were waiting for the briefing to start but they cancelled it and asked us to wait for a ‘big’ announcement,” says a local banking analyst.
That a potential RHB-AMMB merger could be on the cards is not exactly surprising. Rumours that the two may pair up have long made their rounds in the industry. The two have a common shareholder in the Employees Provident Fund (EPF), which has a 40.7% stake in RHB and 9.95% stake in AMMB.
In its March 20 issue, The Edge Malaysia weekly reported that talk of a potential merger between the mid-sized lenders had resurfaced in the banking circle. It cited a source as saying that an adviser — a big accounting firm — had been working on certain aspects of the prospective union.
“The firm was brought on board to help study this. It’s been kept very hush-hush, given the sensitivity [of the matter]. It’s a very small group that is aware of this,” the report said.
The report also cited the source as saying that there had been preliminary discussions on the matter among some of the key shareholders of both banks over the last few months.
AMMB has long been seen as an M&A candidate. Its largest shareholder, Australia and New Zealand Banking Group Ltd (ANZ), said last November that it would be looking to sell its 23.78% stake in the Malaysian lender over the next 12 to 18 months. Private equity firms and some Chinese banks had previously shown interest in the stake, but nothing came out of it.
Its second-largest shareholder, meanwhile, founder and chairman Tan Sri Azman Hashim, who holds a 12.97% stake, may be more open to selling as he is retiring from almost all his positions within the banking group over the next two years.
Over at RHB, its largest shareholders after the EPF are Aabar Investment PJS (17.75%) and OSK Group’s Tan Sri Ong Leong Huat (10.13%).
RHB and AMMB combined, with total assets of RM365.88 billion, would be the largest by assets behind Malayan Banking Bhd, CIMB Group Holdings Bhd and Public Bank Bhd — based on their asset size as at end-2016.
The share price of AMMB and RHB have been on the rise since the start of the year. AMMB has gained 22% year to date to close at RM5.21 yesterday, trading at price-to-book of 0.98 times, while RHB has increased 15% and trading at price-to-book of 0.97 times.