Two major Malaysian financial groups, RHB Bank Bhd and AmBank Group, have called of their planned merger.
Had the deal been completed, it would’ve resulted in Malaysia’s largest general insurance, asset management, and equity broking firm, as well as the second-largest Islamic bank, analysts said.
Stock exchange filings from both groups indicated that RHB and AmBank were unable to reach a mutually acceptable agreement for the merger. No specific reasons were given, but there was speculations the terms were rejected by shareholders of both RHB and AmBank.
“There were concerns expressed on several issues from valuations of RHB to contingent liabilities that AmBank could face from the dealings with 1MDB (1Malaysia Development Bhd),” an anonymous source told The Star. “Both banks held emergency meetings until late yesterday and decided to call it off.”
AmBank was recently fined MYR53.7 million (US$12.55 million) by Bank Negara Malaysia, the country’s central bank, for violating the Financial Services Act of 2013. The charges were connected to its dealings with the controversial 1MDB, which was linked to a corruption scandal.
In a statement, AmBank Group CEO Datuk Sulaiman Mohd Tahir said that the company is confidently moving forward despite the deal’s failure. He added: “Our group’s strategy and direction remains the same. We remain focused on our 2018 business plan, as we work towards running the bank better and changing the bank while delivering optimal returns for our shareholders.”
Datuk Khairussaleh Ramli, RHB group managing director, said that RHB will continue to implement its initiatives to create value for customers and deliver superior service.
This is the second failed merger attempt for RHB, as a previous three-way merger with CIMB Group Holdings Bhd and Malaysia Building Society Bhd in 2015 failed to materialise.
Related stories:
RHB-AmBank merger to create Malaysia’s largest general insurer
Foreign-owned insurers in Malaysia rushing to find domestic partners
Azman Hashim to retire from AMMB Group’s units
