Maybank targets RHB takeover proposal by end of June

Maybank will only proceed with the purchase if it adds to earnings to be used to compete with Chinese banks’ entrance in Malaysia.

Malayan Banking Bhd. (MAY), Malaysia’s biggest lender, will present a proposal to acquire rival RHB Capital Bhd. by the end of the month, its chairman said.

“An acquisition would give us scale,” Malayan Banking Chairman Megat Zaharuddin Megat Mohd Nor told reporters in Kuala Lumpur on Monday. “You need scale to compete. Not only the incumbent Southeast Asian players are trying to grow their business here, we have global players from other parts of the world that are focusing in this part of the world.”

Malayan Banking, or Maybank, and its biggest local rival CIMB Group Holdings Bhd. (CIMB) last month won approval from the country’s central bank to begin competing merger talks with RHB Capital Bhd. (RHBC) to potentially create Southeast Asia’s biggest lender by market value. The combined capitalization of Maybank and RHB would be $28.6 billion, based on today’s share prices at the 12:30 p.m. trading break, exceeding Singapore’s DBS Group Holdings Ltd. (DBS)

Kuala Lumpur-based Maybank will only proceed with the acquisition if it adds to earnings, Megat Zaharuddin said. It would be “disciplined” not to overpay, Chief Executive Officer Abdul Wahid Omar said.

Malaysia’s two biggest banks are seeking the acquisition to expand amid rising competition as the central bank grants more licenses to international players including Bank of China Ltd. Hong Leong Bank Bhd. (HLBK) last month bought EON Capital Bhd., while ECM Libra Financial Group Bhd. is said to have appointed an adviser to find a buyer.

RHB was last month overtaken as Malaysia’s fourth-biggest lender by assets following Hong Leong’s purchase of EON. RHB has financial service operations including a branch network, treasury, investment banking and Islamic finance.

View the full story in Bloomberg.