Three Malaysian financial institutions – RHB Capital, Malaysia Building Society and CIMB Group – have devised a merger plan to create a mega bank in the country.
Bursa Malaysia has been updated about the plan, reports The Star.
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All three banks will submit a letter to Bank Negara to grant approval to launch a corporate exercise to build a mega bank that will have a market capitalization of more than MYR90bn ($28.37bn).
A source familiar with the development was quoted by The Star as saying that "The deal is likely to be done at 1.75 times book value based on CIMB’s current valuation of almost 1.70 times book. It is unlikely to be transacted at anything less."
RHB Cap would have a market capitalization of approximately MYR30bn ($b9.45n), whereas MBSB’s total capitalization is expected to touch nearly MYR6.8bn ($2.14bn).
"Together with CIMB’s market capitalisation, the merged entity would fetch a market value of more than RM90bil," the source told the publication.
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By GlobalDataThe Employees Provident Fund (EPF) will impart an important role in this merger as it has significant stakes in all three companies.
Following integration, the EPF is expected to emerge as the largest shareholder in the mega bank, with a stake estimated to be more than 25%.
