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Three Malaysian banks in talks to merge

If successful, a merger would create the country’s biggest bank and one of the largest in Southeast Asia. The proposed merger plan includes the creation of a mega Islamic bank.

KUALA LUMPUR: Three Malaysian financial institutions – RHB Capital Bhd, Malaysia Building Society Bhd (MBSB) and CIMB Group Holdings Bhd – have suspended trading of their shares as they announced that the banks are in merger talks.

According to Bernama, the three banks on Thursday announced the approval from Bank Negara Malaysia to commence discussions on the merger.

Following this, the three parties have entered a 90-day exclusivity agreement to negotiate and finalise pricing, structure, and other relevant terms and conditions for a proposed merger of the three entities and the creation of a mega Islamic bank.

"We believe that there is inherent value and that there will be many opportunities which will arise from this proposed merger. We hope to explore this further through our discussions," said Kellee Kam, group managing director of RHB Capital.

If successful, a merger would create the country’s biggest bank and one of the largest in Southeast Asia with a market capitalisation of more than 90 billion ringgit (S$35.2 billion), Wall Street Journal said.

An option being discussed is a share issue by CIMB to the shareholders of the other two banks, though minority shareholders of RHB and MBSB could be given a cash option as well.

Malayan Banking Bhd, or Maybank, is currently the country's largest bank, while CIMB is the country's second-biggest, the Wall Street Journal said.

The discussions are in their preliminary stage and a merger will need formal approval from Malaysian regulators, the Wall Street Journal report added.

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