KUALA LUMPUR (Oct 1): Malaysia Building Society Bhd (MBSB) said it will commence its merger talks with Bank Muamalat Malaysia Bhd's shareholders — Khazahnah Nasional Bhd and DRB-Hicom Bhd — in relation to the proposed merger between the two financial institutions.

In a filing with Bursa Malaysia today, MBSB said Bank Negara Malaysia (BNM) has no objection in principle for MBSB to commence negotiations with Bank Muamalat's shareholders.

DRB-Hicom holds a 70% equity stake in the Islamic bank while Khazanah Nasional has a 30% stake.

"BNM has informed us via a letter dated Sept 30," MBSB said, adding the central bank has requested that the negotiations must be completed within three months from the date of the letter.

It said Citigroup Global Markets Ltd and AmInvestment Bank Bhd will act as advisers for MBSB in the proposed merger.

The financial institution said further details on the proposed merger will be announced in due course.

Should the talks proceed, it will pave the way for MBSB to obtain its full-fledged Islamic banking licence.

MBSB was part of a proposed tripartite merger with CIMB Group Holdings Bhd and RHB Capital Bhd, which was aborted in January, with the parties citing unfavourable economic conditions.

MBSB gained five sen or 3.42% to RM1.51 today, bringing its market capitalisation to RM4.34 billion.

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