Malaysia Lenders RHB Bank, AMMB Holdings Call Off Merger

By Yantoultra Ngui Features Dow Jones Newswires

KUALA LUMPUR, Malaysia--RHB Bank Bhd. (1066.KU) and AMMB Holdings Bhd. (1015.KU), Malaysia's fourth- and sixth-largest lenders by assets, respectively, are expected to call off talks for a proposed merger, people familiar with the matter said Tuesday.

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Both banks weren't able to agree on the terms during merger talks, the people said. The deal, if successful, would challenge the position of Public Bank Bhd. (1295.KU) as the country's third-largest lender.

Spokespeople for the banks declined to comment and said announcements would be made later in the day.

Some analysts had said that the proposed merger, first announced early June, wouldn't create much synergy as both banks have similar target markets.

If confirmed, this would mark RHB's second failed merger attempt in recent years. In January 2015, RHB attempted a three-way merger with the country's second-largest lender, CIMB Group Holdings Bhd. (1023.KU), and nonbank lender Malaysia Building Society Bhd. (1171.KU). That combination would have created Malaysia's biggest bank by assets, overtaking Malayan Banking Bhd. (1155.KU). Talks fell through, however, partly due to disagreements over how to value the shares of the three lenders, the banks said.

Shares of both banks were suspended Tuesday pending material announcement.

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Write to Yantoultra Ngui at yantoultra.ngui@wsj.com

KUALA LUMPUR, Malaysia--Malaysia's RHB Bank Bhd. (1066.KU) and AMMB Holdings Bhd. (1015.KU), the country's fourth- and sixth-largest lenders by assets, respectively, said they agreed to end discussions on their proposed merger.

"After much discussion and deliberation, RHB Bank and AmBank Group (AMMB) were not able to reach an agreement on mutually acceptable terms and conditions for the proposed merger," RHB and AMMB said Tuesday in a joint statement and local stock exchange filings.

With the end of the merger discussions, the exclusivity period entered into by both banks June 1 will lapse immediately, the banks said.

The Wall Street Journal previously reported RHB and AMMB were expected to call off the proposed deal because of a failure to agree on terms, citing people familiar with the matter.

Shares of both banks were suspended Tuesday and will resume trading Wednesday.

RHB's market capitalization was 19.57 billion Malaysia ringgit ($4.57 billion) as of Monday, while AMMB's was MYR14.17 billion.

Some analysts had said the proposed merger wouldn't create much synergy, as the banks have similar target markets. The deal would have challenged the position of Public Bank Bhd. (1295.KU) as the country's third-largest lender.

Moving forward, RHB and AMMB said they will focus on their business plans and strategies, respectively.

This also marks RHB's second failed merger attempt in recent years. In January 2015, RHB attempted a three-way merger with the country's second-largest lender, CIMB Group Holdings Bhd. (1023.KU), and nonbank lender Malaysia Building Society Bhd. (1171.KU). That combination would have created Malaysia's biggest bank by assets, overtaking Malayan Banking Bhd. (1155.KU). Talks fell through, however, partly amid disagreements over how to value the shares of the three lenders.

AMMB's large shareholders include Australia & New Zealand Banking Group Ltd. (ANZ.AU) and AMMB's founder and chairman, Azman Hashim. Both previously hinted at plans to exit AMMB.

RHB's major shareholders include state pension fund Employees Provident Fund, Aabar Investments PJS and OSK Holdings Bhd., according to the banks' latest annual reports.

Write to Yantoultra Ngui at yantoultra.ngui@wsj.com

(END) Dow Jones Newswires

August 22, 2017 08:31 ET (12:31 GMT)