Thursday, July 7, 2011

RHB Cap says still in market for merger partner

KUALA LUMPUR: RHB Capital, Malaysia's fifth largest lender, remains open to merger opportunities if the price is right, its chief said after two larger rivals scrapped plans to acquire it in a bid to create Southeast Asia's biggest bank.

RHB was earlier pursued by Maybank'' and, Malaysia's top two lenders, and is expected to remain in the spotlight despite the failed bids as the authorities encourage consolidation to create bigger banks with the muscle to grab regional market share.

A potential merger with Maybank, CIMB or other lenders could be considered if valuations are right, RHB's group managing director Kellee Kam told Reuters in an interview on Thursday, July 7

"We are happy with RHB's standalone strategy, but if opportunities for M&A exists that outweigh a standalone strategy, then it's something that can be evaluated," Kam said.

"As we understand it, they (CIMB and Maybank) believed they couldn't put together a compelling enough proposition for us to be able to continue our discussions."

CIMB and Maybank called off separate merger plans with RHB last month after Abu Dhabi Commercial Bank'' sold its 25 percent stake in RHB to its sister company Aabar at RM10.80 per share.

The RM10.80 price tag effectively prices RHB at RM23.7 billion or 2.25 times book value. Analysts said that Aabar's transacted price had set a benchmark for any potential merger deal, which could have deterred Maybank and CIMB.

But a banker involved in the earlier merger discussions told Reuters the share sale to Aabar had not been completed with the Abu Dhabi investment fund yet to be registered as an RHB shareholder.

All conditions of the sale agreement have been met but as the shares have not been transferred from Abu Dhabi Commercial Bank meant that the final sale price could still change, the banker, who was not authorised to speak to the media, said.

"If the deal happens at a lower price, the banks can probably look at it again," the banker said. "It can be resurrected. It's all about the valuation."

Kam said a change in the price was a possibility although RHB was not presently not in discussions with anyone. - Reuters

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