Concerns for consumers
However, a major shareholder impacted by this business move are consumers of RHB and AmBank. How will the combinstion of two large banking entities – and the side decisions itio
Several unions and industry leaders have spoken up about how this merger will not be in the best interests of said users.
For one, the Sarawak Bank Employees Union and Malaysian Trades Union Congress (MTUC) Sarawak Branch in a joint statement said the RHB-AMMB merger is not in the best interests of consumers and businesses.
The unions in a June 9 statement said it was concerned on this move as it will have an adverse impact in terms of competitiveness.
“We believe that the merger will not be in the interest of consumers and businesses, especially small business as it will reduce competition,” said Law Kiat Min, General Secretary, SBEU general secretary and also MTUC Sarawak asisstant secretary.
“The Competition Commission must look into the adverse impact of the merger on competition.”
Large banks with major market share can become too big to fail, Law said, and the government may be forced to bail them out to avoid consequent economic disruptions and the cost to taxpayers will be significant.
“Such big banks might be even encouraged to take greater risk, knowing that the government would be likely to bail it out,” he stated.
“There is no real efficiency/cost savings from the merger. If anything, the real benefit is from the rationalisation of duplicating branches and cutting staff to make money,” he added in the statement. “We expect thousands of jobs to be affected by the merger exercise.
Particularly, consumers in rural areas will be specifically impacted as there is still a need to have small banks that understand the local conditions and able to serve the particular need of small business and depositors.
He said in most countries, small banks are flourishing and are offering a veryimportant alternative to the bigger international banks. Small banks have a higher proportion of their assets in loans to small businesses than larger banks.
“Already we have seen big banks closing down branches in small rural towns and move them to high-density urban areas.
“RHB Bank has just closed down three branches in Sarawak in Sri Aman, Kapit and Marudi late last year, leaving customers and businesses in those areas high and dry. If this goes on, very soon the rural areas will not have any bank branches.
“We believe that such mergers will make access to banking much harder and more expensive for small businesses and consumers.”