Past mergers to boost Malaysian banks

Malaysian banking is set to realize financial gains after a number of mergers and acquisitions.

HwangDBS Research pointed out that Malaysian banks had been involved in M&As in one way or another over the past two years, which meant 2013 would see the beginning of value creation.

“The Hong Leong Bank Bhd-EON Capital Bhd deal is the largest so far and has reached the tail end of extracting synergies, while that has just started for RHB Capital Bhd-OSK Investment Bank Bhd, CIMB Holdings Bhd-Royal Bank of Scotland-Bank of Commerce and AMMB Holdings Bhd -Kurnia Insurans Bhd-MBF Cards Sdn Bhd," said HwangDBS Research.

“The ability to deliver value to shareholders (ROE) after the recent round of M&As will be the key earnings driver,” the research house stated while noting that the typical M&A gestation period for integration is 18 to 24 months.

“We will not rule out a further consolidation of the Malaysian banking industry.

Mergers that are complementary would create value in the industry, while further liberalisation could trigger the further consolidation of banks, stockbrokers and insurers,” it highlighted.

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