AMMB, RHB Bank to decide on merger by September

KUALA LUMPUR: AMMB Holdings Bhd says both itself and RHB Bank Bhd will submit to the authorities on whether or not to proceed with their merger by the end of August or beginning September.

Both banks are at the negotiation stage now for the merger, said AMMB’s group chief executive officer Datuk Sulaiman Tahir ( pic).

“We negotiate well and hopefully, things are ironed out and we would then come back to the market in late August or early September.

“We need to prove to the authorities that everything is okay and that we’d like to get the approval to merge,” he told a press conference after the group’s AGM.

“After August it will be non-exclusive, meaning that AMMB or RHB can talk to any other parties. But assuming that we want to do it, we can still do it. This is what it means. If we want to do it, then we will do it very quickly,” he added.

He said if the merger happens, it would provide economies of scale for both banks and give AMMB an overseas presence.

“It’s highly complementary for both parties. If this merger happens, we will be the fourth-largest bank. But if you compare the Malaysian numbers alone for both RHB and AMMB, and then compare with our peers we would be very close to the top-three actually,” he said.

“In terms of fund management, when combined we should be the largest fund manager. In Islamic banking, we would be at number two, just slightly below Malayan Banking Bhd. The merger has plenty of benefits, given that the investments that I make will be the same while the returns the combined entity gets is from a bigger base. Scale in banking is very important,” he added.

He said that the merger could help the combined entity see how it can drive Islamic banking across the region.

On possible redundancies arising from the merger such as job duplications, Sulaiman said that it was still too early to tell on this front.

“Even if we do not merge, we are always looking at opportunities to revisit our processes. It is not about job cuts, but in some areas we need to see particularly in the front lines. It will be an opportunity to set new job scopes as a result of a change in environment,” he said.

“If we do decide to do so (job cuts), it will be based on a mutual separation scheme and this is a process that we will take, given that it is a highly regulated industry. We will go through a process for this,” Sulaiman added.

In June, both RHB and AMMB announced that they had obtained approval from Bank Negara to commence discussions on a proposed merger.

The banks said they envisaged that the transaction would be an allshare merger.

The two lenders have until the end of next month to discuss the merger deal on an exclusive basis.

Shares in AMMB closed one sen up to RM4.95, while RHB closed higher by three sen to RM5 yesterday.