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CIMB: Malaysia merger signals Apac consolidation

A three-way banking merger is the biggest yet in Malaysia, part of a regional trend to boost domestic firms to compete locally and abroad. It would also give the country a big contender in Islamic finance

Standing out in the crowded Asian banking market is a tough task. Domestic players jostle with international banks in a patchwork of markets, all with their own cultures and peculiarities. But the whole region took notice in July when plans emerged from Malaysia for the three-way merger of CIMB Group, RHB Capital and Malaysia Building Society (MBSB), laying the foundations for the creation of a new force in south-east Asian banking, and possibly beyond.

The three firms entered into a 90-day exclusivity agreement to discuss “pricing, structure and other relevant terms and conditions”, after the Central Bank of Malaysia approved the talks on July 10. CIMB said the aim was to merge with RHB, while creating an enlarged Islamic banking franchise with MBSB.

“There is a prima facie case for a value-creating merger between the three entities and we want to get into detailed discussions to validate it,” said Dato’ Sri Nazir Razak, chief executive of CIMB Group, when the discussions were announced.

The Malaysian authorities are concerned that some of our institutions are not too large and need to be larger to compete. They have encouraged consolidationM&A lawyer

The deal marks a pivotal moment for Malaysia’s banking sector.

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