Maybank, CIMB scramble over RHB Capital

MANILA, Philippines - Malayan Banking (Maybank) and CIMB, Malaysia’s two largest banks, are getting ready for one of the biggest corporate battles in recent history.

According to FinanceAsia, Bank Negara gave the two the nod to bid for RHB Capital, ranked number five.

“Size is also important for Bank Negara, the central bank, which is keen for a second round of consolidation in the industry as it allows more participation by foreign lenders in its domestic market. An earlier spate of government-led bank mergers in 1998 reduced the number of lenders from 54 to 10,” FinanceAsia, one of the leading financial publications in the region, said.

A takeover by Maybank would create a banking group with assets of M$513 billion ($170 billion), and one by CIMB would have combined assets of M$405 billion, based on end-March 2011 data. RHB’s asset size was M$133 billion.

Maybank said the “potential transaction, if it materializes, would be consistent with Maybank’s vision to become a regional financial services leader, and support its strategic objectives of being the undisputed No. 1 retail financial services provider in Malaysia and the leading Islamic bank in Asean.”

An enlarged Maybank would be worth about $28.8 billion, putting it ahead of the region’s biggest bank, Singapore’s DBS Group, which is valued at $27.7 billion; the combined market capitalization of CIMB and RHB would be around $27.3 billion based on current share prices.

Bank Negara wants national champions and CIMB has been quick to voice its support for that policy. Indeed, so far, that has been CIMB’s clearest articulation of the strategic reasoning for its interest in RHB.

“We believe that it is incumbent on us to engage in this opportunity to put forward a value-creating merger between the two banks and support the national banking consolidation agenda,” said CIMB’s group chief executive Nazir Razak in a statement following the announcement. Razak is also the brother of Malaysian Prime Minister Najib Razak.