CIMB and Maybank Bid for RHB Capital

Updated: June 23 2011

Both banks, CIMB Group and Maybank had dropped separate plans to acquire RHB Capital inlight of Abu Dhabi Commercial Bank setting a high valuation bar when it sold its 25% stake in RHB to Aabar Investment at RM10.80 a share last week.

The price paid by Aabar values RHB at around 23.7 billion ringgit ($7.8 billion), nearly 18 percent above the current market value. Other shareholders likely would also expect at least that much under a deal.  

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The 2 largest bank--CIMB Group Holding and Maybank will fight each other to take control on RHB Capital which could cost over RM20 billion. A merger of either bank with RHBCap would create one of the largest banking group in South-east Asia.

Bank Negara Malaysia has given a greenlight to both banking groups for them to commence talks with RHB Capital and its substantial shareholders for a merger. CIMB and Maybank have made their attentions to do so to Bursa Malaysia.

In term of assets, Maybank is the largest bank in Malaysia which has a total assets of US$110.3 billion, followed by CIMB Group (US$88.3 billion)); whereas RHB is the 5th largest bank (US$42.4 billion). It means, with a merger exercise come true, if CIMB wins the battle, it automatically will become the largest bank in Malaysia. But, for Maybank, if it win the bid, Maybank will become the biggest bank in the region by market value, overtaking Singapore's DBS Bank.

RHBCap is controlled by the EPF with a 45% stake and its another shareholder, Abu Dhabi Commercial Bank (ADCB) is looking to sell its 25% stake in RHBCap.

The two banks have a equal chance to win the bid, now it is up to the Government to choose. But, if Malaysia really needs a very strong bank and based on a few factors such as Government's vision and mission, new economic policy and present leadership style,  I believe Maybank will win the bid.

Source: TheStar and NST, June 1, 2011

Abd Rahaman Rasid

FELDA, June 1, 2011