RHB-AmBank merger talks boost positive sentiment

KUALA LUMPUR: RHB Bank Bhd (RHB) and AMMB Holdings Bhd's (AmBank) proposed merger to create one of Malaysia's biggest lenders has signalled positive development in Malaysia as well as the Asean region.
Ushering an epoch of consolidation in the banking industry, IQI Global Chief Economist, Shan Saeed, said the future direction of the banking group was now subject to the enlarged entities' priorities.
"Going forward, I see more and more banks will be going into the consolidation phase, and there would be fewer and fewer players providing financial services to clients," he told Bernama when asked to comment on the proposed merger.
"It's a game of giants which is healthy for the market due to solid capital adequacy ratio and meeting the Basel 111 requirement," he added.
RHB and AmBank in a joint statement on Thursday said they had received the nod from the Malaysian central bank to commence the merger negotiations.
The transaction is expected to be an all-share deal and the two banks have until Aug 30 to exclusively discuss a deal.
Shan said the merger would reinforce RHB's ranking as the fourth largest Malaysian bank by assets behind Maybank, CIMB Group Holdings and Public Bank. AmBank is currently the country's sixth biggest bank.
"The merger is part of a strategic intent of RHB to enhance market share.
"The merger of these two banks will be leading to consolidation and building synergies. Both are top banks, this will create economies of scale and improve efficiency with the amalgamation.
"The banking activity will continue to grow in the near future," added Shan. — Bernama
Bursa Malaysia seems to laud the news, with both RHB and AmBank shares climbed early Friday as investors were positive on the proposed merger of the banks.
RHB and AmBank were up 10 sen each at opening to RM5.49 and RM5.31, respectively, but mild profit-taking at mid-day retraced RHB to RM5.27 (- 12 sen) while AmBank eased to RM5.15 (- 6 sen).
Meanwhile, the Finance index surged 100.15 points or 0.60 per cent at mid-day to 16,670.92, while the benchmark FTSE Bursa Malaysia KLCI was 9.65 points better (+0.55 per cent) at 1,772.76 from yesterday's close of 1,763.37.