THE preliminary talks for merger between CIMB Group (pic), RHB Capital Bhd and Malaysia Building Society Bhd (MBSB) indicate that some merger fever is at least getting back into the Malaysian market.
Unlike elsewhere in Asia, especially in China and Japan where mergers and acquisitions (M&As) are active, the Malaysian market has remained pretty quiet. Even in nearby Singapore, there are ocassional large M&As in the property sector.
Having said that, within the Malaysian banking sector, there are already many strategic partnerships in place.
This potential merger between CIMB, RHB and MBSB, if it materialises, will bring CIMB a step closer to realise its ambition of being a top regional player.
CIMB is already present in the major Asean markets, having acquired strategic stakes when prices were good.
It has built a presence in Indonesia when RHB Cap has just experienced a setback in failing to get approval for the acquisition of a stake in Bank Mestika.
CIMB, with substantial experience in investment banking and stockbroking, will also lend its experience in running the enlarged RHB Cap/OSK group.
However, this is not the first time CIMB has proposed to merge with RHB. Back in 2011, there was a similar proposal which did not include MBSB, and that had lapsed after three months.
The block of 21.43% belonging to Abu Dhabi-based Aabar Investments Pte Ltd was up for sale with the asking price of two times book value at RM10.80 per share.
This was deemed too expensive.
The timing was better now, as the book value had improved to 1.5 times at RM10.70 per share, said an analyst.
However, the current talks are expected to last many months.
It is also high time for the Employees Provident Fund (EPF), which owns 40.76% of RHB Cap and 64.73% in MBSB, to relinquish some control of the banking groups.
Ever since its acquisition of a large stake in RHB Cap, which was eventually pared down to 40.76%, there have been criticisms that EPF should focus on being an investment fund and not banking.
But RHB Cap has continued to do well and yield good dividends.
Under the potential merger, it will be a question of valuation for the expected share swap between EPF and the potentially enlarged CIMB group.
Altogether, it will be a potentially exciting combination with RHB Bank’s strength in commercial banking and the commercial bank that CIMB is building.
After three years and several pre-emptive steps to control property loans, Bank Negara is finally raising interest rates by a tad 25 basis points.
Is that enough to bite?
That would raise monthly instalments by just 3%, something which analysts say will affect more of the lower income group.
But Bank Negara is not expected to raise interest rates again in the foreseeable future.
“They will probably stop and look at it again,’’ said an analyst.
It will be more of an impact on sentiment as the current feeling is that cheap financing is too readily available.
In tandem with the rise in interest rates, deposit rates are also expected to go up by 0.25%.
That is aimed at attracting more savers especially those who are flush with funds and looking for investments with better returns.
Sometimes, in their search for higher returns, they fall victim to financial scams and lose all their hard-earned money.
The public spotlight on money laundering is gathering momentum.
Singapore prosecuted a record number of money laundering cases and seized more than S$115mil (RM295.5mil) of suspected criminal proceeds last year, said New Straits Times Online.
The Commercial Affairs Depart-ment received 22,417 suspicious transactions reports last year, a 25% increase from a year earlier, said the report by the agency on its website.
It provided financial intelligence to foreign agencies in 341 instances, up from 160 in 2012.
Singapore’s white-collar police has also tripled its financial investigation resources.
Being an internal transport hub and financial centre, Singapore is ever alert to potential cases of cross-border money laundering and terrorism financing risks.
It is not Singapore alone but all countries in the region have to step up their alert systems and share information on this latest cross-border crime.
Columnist Yap Leng Kuen reckons that with CIMB potentially moving into RHB Cap, other banking groups like Maybank may also move to flex their muscles in the competitive world of banking.
