CIMB is said to be "lukewarm" towards a merger with RHB.
CIMB is currently on the race against Maybank in merging with RHB to create what potentially could be Southeast Asia's biggest bank.
"A surprise if CIMB does join the bidding war," said OSK Research following its recent meeting with the bank, revealing that the bank's participation in the negotiations with RHB Capital was largely on Bank Negara Malaysia's invitation to consider synergistic merger opportunities rather than its own initiative.
According to OSK Research, Maybank was a little more responsive to the merger while CIMB was relatively more lukewarm. It said while the market may be harping on scale as justification for the merger, CIMB has never merged or acquired purely for scale perspective.
Southern Bank, which was much smaller than the group, was acquired for its consumer banking and wealth management expertise, while GK Goh was bought for its established regional investment banking franchise.
"There has to be a complementary fit and with the group already having a market leader foothold in Malaysia via its investment and corporate banking franchise and also being the second largest bank in terms of asset size, acquiring RHB Capital solely for scale would be value destructive to CIMB," it said.
"CIMB's management essentially concurs with our view that there is a lack of potential synergy that can be extracted from the merger and any upside would be largely cost driven, which in our view will not be sufficient to offset the various business and revenue duplication arising from such a merger," OSK said.
OSK also believed that CIMB's focus was in extracting more synergy from its regional platform while continuing to execute its turnaround plan for CIMB Thai.
As for Maybank, although, a union with RHB may not be the best fit and pricing could be a major hurdle, the union displays better synergies than CIMB-RHB, especially in terms of scale and opportunity.
Post merger, Maybank's total asset size would be nearly 88 per cent ahead of CIMB and it would also give Malaysia's largest bank a better reach in Singapore.
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