RHB, AmBank merger likely to be share-swap deal

RHB, AmBank have obtained Bank Negara approval to start negotiations

THE proposed merger between RHB Bank Bhd and AMMB Holdings Bhd (AmBank Group) to create the country’s fourthlargest banking group, with assets of more than RM360 billion, will likely be an all-share transaction.

In a joint statement yesterday, RHB and AmBank said they had obtained Bank Negara Malaysia’s approval to start merger talks.

“Both parties have entered into an exclusivity agreement to negotiate and finalise terms and conditions of the proposed merger for submission to the relevant regulatory authorities.

“The exclusivity agreement will expire on August 30. It is envisaged that the transaction will effectively be an all-shares merger,” said the statement.

In a share-swap transaction, RHB, for example, would offer AmBank shareholders a certain number of RHB shares for every AmBank share owned.

A one-for-one deal would see AmBank shareholders receiving an equal number of RHB shares. The equity structure of RHB may change depending on the value of shares offered under the deal.

RHB group managing director Datuk Khairussaleh Ramli said the merger would help the banking group create scale and market leadership across key business segments.

“We are confident that if the proposed merger takes place, it will create greater synergy for the enlarged banking group, benefiting our shareholders, customers, employees and all other stakeholders,” he said.

AmBank group chief executive officer Datuk Sulaiman Mohd Tahir said the merger marked a new chapter and came at a transformative time for the bank.

“Our combined strengths in key business segments, particularly in retail and investment banking, will bode well for us as we move forward to achieve our goal of becoming a formidable banking group,” he said.

Banking analysts said the Employees Provident Fund (EPF) — which was RHB’s largest shareholder and which also had shares in AmBank — would remain the largest shareholder in the new entity under a share-swap deal.

They said the deal would revitalise both banks and solidify RHB’s position as the fourthlargest bank in the market.

The trading of RHB and AmBank shares, which was suspended yesterday pending the announcement, will resume on Bursa Malaysia today.

AmBank is the country’s sixth largest lender.