Merger to create stronger group but analysts neutral

For the transaction to go through, AMMB will require 75 per cent of its shareholders’ approval via a special resolution, while the Group will require 50 per cent plus one shareholders’ approval via an ordinary resolution.

KUCHING: The proposed merger between RHB Bank Bhd (RHB) and AMMB Holdings Bhd (AMMB) will create a stronger banking group, becoming Malaysia’s fourth largest bank and Asean’s ninth largest by assets.

In a corporate update report by the research arm of MIDF Amanah Investment Bank Bhd ( MIDF Research), the merger would be an all-shares transaction where RHB would issue shares to acquire the asset and liabilities of AMMB.

“For the transaction to go through, AMMB will require 75 per cent of its shareholders’ approval via a special resolution, while the Group will require 50 per cent plus one shareholders’ approval via an ordinary resolution,” said the research arm, adding that RHB has guided that it does not intend to raise cash for the transaction.

MIDF Research

Moreover, MIDF Research agrees that the development is likely to prove to be positive as both groups are currently facing difficulties in generating solid growth by themselves.

“This was evident by their performance in previous quarters as the pre-provision operating profit (PPOP) for RHB fell by 3.9 per cent year- on- year ( y- o- y), contributing to a total income decline of 1.7 per cent y-o-y in the first quarter of financial year 2017 (1QFY17).

“We believe that by solidifying its position, the new entity will be able to consolidate its operations and product offerings. Turn to Page B2, Col 1

In a corporate update report by MIDF Research, the merger would be an all-shares transaction where RHB would issue shares to acquire the asset and liabilities of AMMB.