KUALA LUMPUR: CIMB Equities Research will not surprised if were to start merger talks with in the future as this would create the third largest bank in Malaysia with total assets of RM358.9bil, as at March 31. The research house said the move would create the third largest bank in Malaysia, enabling it to rival its bigger peers. Additionally, AMMB’s major shareholder, ANZ, reportedly has a plan to exit from AMMB. A merger with AMMB would increase RHB Capital’s exposure to the auto loan segment but would also tighten its liquidity. CIMB Research has maintained an “Add” call on RHB Cap and its top pick for the sector, premised on the bank’s robust loan growth, swift expansion in Singapore and rising investment banking market share. Its dividend discount model based target price (cost of equity of 11.8%; long term growth of 4%) is intact. “We think that the synergies would mostly come from the cost side, to be achieved via staff retrenchment and closure of some branches. Revenue synergy is harder to achieve as both banks have a similar business structure and there could be overlaps in their client base. “The benefits from the creation of a mega Islamic bank following the merger would only be realised in the longer term. This is because the merged entity would need to meet higher capital requirements and apply for banking licences/embark on M&As in other countries for regional expansion,” CIMB Research said. The research house advised investors to accumulate RHB Cap shares given “At this juncture, we think that a merger with AMMB would be neutral and the actual impact would depend on the valuations attached to both banks in the deal,” it said. Share price of RHB Cap was down 4 sen to RM7.43.
A merger between RHB Capital and AMMB Holdings would create the third largest bank in Malaysia with total assets of MYR 358.9bn ($92.6bn), allowing it to rival its larger peers, according to research by CIMB. Furthermore, reports suggest that ANZ plans to sell its assets in AMMB Holdings. This follows RHB Capital's announcement yesterday that it had no plans to merge with AMMB Holdings following reports in the press that it planned to revisit earlier discussions of a merger.