You are here

Malaysia mega-bank merger called off

Tuesday, January 13, 2015 - 09:46
13294555.jpg
The proposed merger between CIMB Group Holdings and two smaller Malaysian lenders has been cancelled, The Edge Financial Daily reported, citing sources.

[KUALA LUMPUR] The proposed merger between CIMB Group Holdings and two smaller Malaysian lenders to create one of the largest banks in Southeast Asia has been cancelled, The Edge Financial Daily reported, citing sources that it did not identify.

Board members of the banks will meet on Wednesday where the deal will be called off, the Malaysian newspaper said, adding that an announcement will be made by the end of the week.

The merger with RHB Capital and Malaysia Building Society was expected to create a banking group with assets of about US$190 billion (S$254 billion), exceeding Malayan Banking Bhd and making it Southeast Asia's fourth-biggest bank.

The multi-billion dollar state-backed deal was part of Malaysia's ambitious plan to promote its firms as regional champions and also create the world's largest Islamic bank. "There is no further development in relation to the merger at this juncture. Further updates will be made should there be any development," RHB said in a statement.

CIMB and MBSB declined to immediately comment.

Sources told Reuters earlier this week that RHB was seeking new terms of their share exchange, and possibly cash, after shares in CIMB skidded 26 per cent since the merger was first announced in Oct 9, making the deal unattractive.

If the deal was called off, it would add to recent issues with state-linked Malaysian firms after 1Malaysia Development Bhd missed the repayment of a RM2 billion ringgit bridge loan that was due end-December.

Shares of CIMB rose as much as 5.8 per cent to a one-week high, while RHB gained 1.9 per cent and MBSB fell 5.02 per cent.

REUTERS

Powered by GET.comGetCom