Malaysian state pension fund barred from voting in CIMB-led bank merger

[Kuala Lumpur] Malaysian state pension fund Employees Provident Fund (EPF) will not be allowed by the nation's bourse to vote in the proposed merger of CIMB Group Holdings Bhd and two rivals as it is a major shareholder in all of the banks.

The move may open the way for Dubai-based Aabar Investments , a shareholder in one of the lenders - RHB Capital Bhd - to have a bigger say in shaping the creation of Malaysia's biggest bank which financial sources say could have a market value of US$22 billion.

The EPF, which bankers have said is in favour of the deal, had asked the nation's bourse for a waiver to rules which state that it should not vote, arguing that the interests of its 14 million members are at stake.

The fund owns about 14.5 per cent of CIMB, 41 per cent of RHB and 65 per cent of the third bank Malaysia Building Society Bhd . "There are no adequate justifications that the potential conflict of interests involving EPF has been eliminated or sufficiently mitigated," a Malaysia Building Society statement quoted the bourse as saying.

There has been market speculation that Aabar, whose voting power in RHB increases to around 36 per cent from 21 per cent if the EPF cannot vote, will seek terms more favourable to itself. Aabar has declined to comment on the merger. REUTERS