Wednesday April 20, 2011
Plain Speaking - By Yap Leng Kuen
THE banking mergers and acquisitions (M&As) scene is coming alive again with deals expected in the next one to two years. Bankers reckon that this time, it could be fuelled not so much by the smaller but the larger to mid-sized banks.
The stronger groups, mainly Maybank and CIMB, are likely to come under the radar of investors as they forge ahead in their respective core strengths and possibly look for tie-ups to enhance that.
Both banks have made known their ambitions for a strong regional presence; Maybank's recent acquisition of Kim Eng Securities and expansion in Indonesia via Bank Internasional Indonesia are steps in that direction while CIMB has stated its intention to become the top three bank in South-East Asia by market capitalisation and asset size.
Their names have cropped up recently as potential bidders for Abu Dhabi Commercial Bank's (ADCB) 25% stake in RHB Capital Bhd.
ADCB has engaged Goldman Sachs to look into a possible divestment of its stake in RHB Capital which it bought for RM7.20 per share or RM3.9bil in mid-2008.
CIMB, with its growing contributions from the Indonesian operations as well as treasury and investment banking, is seen as a prime candidate for an M&A with RHB which is especially well-known for its strong consumer banking franchise. CIMB has been trying to grow its consumer banking through a previous M&A with Southern Bank; further steps to boost the group in that direction are expected.
It is noted that CIMB and RHB have a common shareholder - Khazanah Nasional Bhd.
In drawing up an M&A strategy, factors such as size and scale are important but equally vital are aspects such as strategic fit and synergies.
We should not assume that just because certain banks are among the smallest, therefore, they should be the first to be merged or swallowed.
In this respect, banks like Affin may just continue to operate as a boutique bank.
The AmBank group, which has struck a strategic partnership with the Australia New Zealand banking group, may be in one of the sweetest spots.
Contrary to common speculations that it may be eyeing an M&A with RHB, the AmBank group may just go ahead with ANZ as its strong partner not just in Malaysia but also the region.
EON Bank, the subject of a takeover bid by Hong Leong Bank and court battle among the directors, will know its fate with regards to the court judgement at end of this month.
Ng Wing Fai of Primus Pacific Partners is challenging the other directors on their decision to table the Hong Leong bid to shareholders,
In the midst of this possible M&A scenario, all eyes turn to Public Bank which has a similar customer base with that of Hong Leong.
Will there be any moves among these two retail and SME strongholds?
Alliance Bank may be sitting pretty on its own now but it is widely regarded to be the potential doorway for DBS Bank of Singapore as they have a common shareholder in Temasek Holdings Ltd.
Langkah Bahagia Sdn Bhd, which holds a 14.8% stake in Alliance Financial Group Bhd (AFG), is said to be looking for a buyer of its stake, held through Vertical Theme Sdn Bhd.
It cannot be confirmed but many believe that stake could be sold to Temasek, Singapore's investment arm.
Vertical Theme has a 29% stake in AFG while Temasek has a 49% stake in the former. Temasek also has a 27.8% stake in the DBS group.
Associate editor Yap Leng Kuen believes the next round of bank mergers could be expensive but focussed on value creation.
http://biz.thestar.com.my/news/story.asp?file=/2011/4/20/business/8514173&sec=business
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