Sat11012014

LAST_UPDATESat, 01 Nov 2014 7am

CIMB Merger Plans Puzzling, Says Paper

People are seen in front of a CIMB bank office in Kuala Lumpur in this February 25, 2014 file photo. Pic: ReutersPeople are seen in front of a CIMB bank office in Kuala Lumpur in this February 25, 2014 file photo. Pic: ReutersKUALA LUMPUR: CIMB’s plans to merge with RHB Capital and Malaysia Building Society to create Malaysia’s biggest bank by asset size, is a puzzling move, according to a Financial Times report.

CIMB and RHB had previously ditched plans to merge because their businesses overlap.

The paper quoted Keith Wee, analyst at UOB KayHian, as saying that the lack of synergies in revenue between CIMB and RHB and integration costs could weigh on the new entity.

In Islamic banking, the new entity would still trail Maybank in terms of assets, it quoted Sue Lin Lim, analyst at AllianceDBS as saying.

The paper also said that Islamic finance currently dominated by Malaysia and Saudi Arabia, is facing competition from London, Hong Kong and Dubai.

CIMB’s chief executive Datuk Seri Nazir Razak is expected to step down to become the chairman of the bank.

He will also be joining the board of Khazanah, Malaysia’s biggest sovereign wealth fund.

Khazanah has 25 per cent of CIMB, and according to speculation would have a 20 per cent stake in the merged CIMB, RHB MBSB.

“That means Mr Nazir is still likely to play a significant role in any new Malaysian banking champion,” the paper said.

The merger comes as Asean is witnessing the emergence of regional corporate champions, such as YTL Corporation in Malaysia, Indonesia’s Salim Group and Wilmar, the Singapore-listed agribusiness, the paper added.

- Malay Mail

http://www.themalaymailonline.com/money/article/cimb-merger-plans-puzzling-says-paper#sthash.XNL5zGsG.dpuf