KUALA LUMPUR: Hong Leong Bank Bhd completed a major integration milestone as of Friday, Aug 12 with the merger of EON Bank, three months after its acquired the latter’s assets and liabilities.

As of Friday, the bank's Customer Day 1 to officially mark the integration of both banking entities, all former EON Bank branches were re-designated as Hong Leong Bank branches.

The combined entity had undergone a complete integration to provide an expanded suite of products and services to customers at its enlarged 329 branches nationwide.

Hong Leong Bank group managing director Yvonne Chia said since the completion of its acquisition of EON Bank on May 6 this year, it had focused on speeding up the integration process to strengthen the potential synergies.

"In just three months, we achieved a key harmonisation milestone to offer our customers the best of both banks under one Hong Leong Bank," she said at the Hong Leong Bank Bangsar branch here.

Together with the former EON Bank branches, Hong Leong Bank now has the second largest network in Malaysia in terms of the number of branches just after Malayan Banking Bhd.

To recap, on Oct 4, 2010, Hong Leong Bank’s shareholders passed the resolution for the acquisition of the assets and liabilities of EON Capital Bhd for RM5.06 billion at an EGM.

With the acquisition of EON Bank, Chia said there was bound to be duplication in terms of branches – with the former EON Bank outlets located very near Hong Leong's existing branches -- which gave rise to branch rationalisation issues within the group.

However, she said the bank had planned to keep the branches as they sought to reach and serve the customers and community better.

"What do we believe in the many years of involvement of the banking landscape, branch banking is about more dialogue and engagement with the client also a much more face -to-face interaction... the simple convenient way in dealing with your relationship be it a business or consumer community member make the difference,"

"We in fact, intend to expand our network over the next few years. Our intention is to learn from the many mergers that has happened before and that is to continue to expand the network but we will reconfigure the branches to serve different customer," she said, adding the acquisition allows Hong Leong Bank to scale up even faster.

As for the two investment bank licences which the enlarged banking group now has following the integration, Chia said one of the licences would have to be sold. Hong Leong Investment Bank Bhd and EON Capital Bhd’s MIMB Investment Bank Bhd each has a licence.

"Under the banking regulation in Malaysia, one (banking group) is only allowed to hold one investment bank licence. We also have some suitors who may be interested in the licence," she said without divulging on the potential buyer of the licence.

Before the integration, Hong Leong Bank and EON Bank had double-digit loan growth target. Under the combined entity, the overall loans growth and sales momentum had been improving since the two banks officially merged on May 6,  she said.

Chia expected Hong Leong Bank to stay relevant in a tougher operating environment as Malaysia's banking sector was fast approaching its maturity.

She said the industry has remained open and transparent with a lot of foreign banks operating in the country, which further heightened the competition among the banks.

"To stay relevant we have to make sure that we are ahead of the curve of what is a changing landscape and to be able to compete head on with many players in the market," she said.

Chia said in an uncertain global economy since the collapse of Lehmann Brothers and the economic turmoil in the US and Europe, it was more challenging for banks to stay relevant and ahead of the competition.

She explained customers were becoming more educated, discerning and demanding for greater transparency and efficiency in dealing with banks.

"Several things are going to happened; customer are getting more educated, there's a lot more transparency with the way customers deal with the banks, there's a lot more technology that we need to spend to bring the convenience to the customers, there's a lot more efficiency we need to drive," she said.

Chia said the local banks had to increase their efficiency compared with their foreign counterparts.

“I think this is where the liberalisation of the financial landscape means to the banking system. It means a lot more opportunities for the man on the street with a lot more choices. We have to continue to work on that," she said.