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Shares of Malaysia's CIMB fall 2% after announcing merger with smaller lenders
[Kuala Lumpur] Shares of Malaysia's CIMB Group Holdings Bhd fell nearly 2 per cent on Friday, a day after it agreed with two smaller domestic lenders to create the country's biggest banking group.
Shares in the smaller banks - RHB Capital Bhd and Malaysia Building Society Bhd (MBSB) - rose 4 per cent and 11.8 per cent respectively.
The benchmark stock index dropped 0.5 per cent.
The three banks announced on Thursday that they had submitted a proposal to the central bank that calls for CIMB, Malaysia's second largest banking group, to merge with RHB, the country's fourth-biggest lender, via a share swap.
CIMB shareholders would own 70 per cent of the merged entity and RHB shareholders would own 30 per cent.
In tandem, the Islamic banking arms of CIMB and RHB would then merge with MBSB to form a mega Islamic bank. The deal is expected to be completed in mid-2015, according to the banks.