Recommend Us | About Us | Back to

News | Financial Calculator | Home Financing | Archived News |


  Welcome to Bernama Banking & Finance Special Page     
Maybank, CIMB May Face Risk Of Overpaying For RHB Capital

KUALA LUMPUR, June 1 (Bernama) -- Malayan Banking Bhd and CIMB Group Holdings Bhd risk overpaying for their bid to merge with RHB Capital Bhd, which will result in their return on equity (ROE) and earnings per share (EPS) diluted to a sizeable rights issue, said a research house.

Assuming that the acquisition price for RHB Capital is between RM10.20 and RM10.60, with the median pricing at RM10.40 per share, the acquisition of RHB Capital would be EPS and ROE dilutive for both Maybank and CIMB, said OSK Research.

This is following the fact that they would have to undergo a relatively sizeable one for-three rights issue to restore their core equity ratio, which would be impacted by roughly RM12 billion in goodwill arising from the acquisition.

"Without a rights issue or issuance of new shares, we estimate that CIMB's core equity ratio will decline, from 11.4 per cent, to less than one per cent, while that of Maybank's will decline, from 11.6 per cent, to 4.7 per cent," said the research house in a note Wednesday.

It was neutral on both CIMB and Maybank's bid for RHB Capital following the risk of overpaying due to two competing bidders.

On the flip side, the acquisition is expected to only enhance the EPS and value for an acquisition pricing below RM9.60, said OSK Research.

At mid-day, RHB Cap's share rose 67 sen or 7.3 per cent to RM9.89.

In a filing to Bursa Malaysia Wednesday, RHB Capital said that it has been formally notified by CIMB and Maybank, respectively, that the central bank has no objection in principle for both banking groups to commence preliminary negotiations.

The proposed negotiations will be deliberated by the board and further announcements on any development would be made in due course, said RHB Capital.

Both Maybank and CIMB have three months to complete the negotiations.

Meanwhile, MIDF Research said the proposed merger would probably signal further consolidation in the banking sector, especially, smaller banks like Affin, Alliance and AmBank.

"Consolidation of banking groups in Malaysia will elevate the competencies of local banks under more challenging environment as well as reduce the intensiveness of competition which will drive down margins significantly," it said.

Eventually market forces might assert pressure on the three smaller banks to look into the possibility of a merger and acquisition, it added.



Al Rajhi Bank Malaysia Appoints Nik Norzrul Thani As New Chairman
Islamic Commercial Banking Institutions Open As Usual On July 8

CIMB Islamic Puasathon: 200 Non-Muslim Employees Raise RM20,000 For Fasting For One Day

Takaful Malaysia Q2 Pre-tax Profit Rises To RM58.11 Million
Free Medical Insurance For More Than 3,500 Felcra Staff Next Year - CEO

Avoid Negotiations If Involve In Accidents - PIAM

US 4.0470/0520
S'pore 2.9973/0015
100 Yen 3.8627/8694
Sterling 5.3335/3422
Euro 4.4889/4961
Source: Bank Negara Malaysia

Starting April the banks have imposed a 50 sen processing fee on top of the 15 sen stamp duty on each cheque. The fee also applies to those applying for a Bankerís Cheque, Bank Draft and Cashierís Order. Do you think this additional charge is justified?

  Main | News | Insurance

© 2016 BERNAMA. All Rights Reserved. Disclaimer | Privacy Policy| Security Policy
This material may not be published, broadcast, rewritten or redistributed in any form except with the prior written permission of BERNAMA.
Best viewed in Firefox 8.0 & Internet Explorer 8.0 with 1024 x 768 resolution