The collapse of mega-merge proposal

Folks,

The proposal to create the largest bank conventional bank and mega Islamic bank in Malaysia, and the fourth largest bank in South East Asia collapsed two days ago.

I am personally sad to hear this, as I think that Malaysia needs a much more bigger bank to compete globally. But of course, other factors must also be considered as well.

In a filing with Bursa Malaysia, RHB Capital said (click here):

On behalf of RHB Capital, RHB Investment Bank Berhad wishes to announce the Company has been notified by CIMB Group vide its letter dated 14 January 2015 that its board of directors have, after further deliberation, arrived at a decision to abort the Proposed Merger in light of current economic conditions. CIMB Group and RHB Capital, as well as their relevant subsidiaries, have withdrawn their joint application to BNM to seek approval from BNM and/or the MoF through BNM for, amongst others, the Proposed Merger. With that, the Exclusivity Period pursuant to the exclusivity agreement between CIMB Group, RHB Capital and MBSB dated 10 July 2014 has expired.

There is also a joint press release, which can be read here.

And yesterday, CIMB Research published a rather lengthy analysis  on this matter. You can read it below, and get the PDF copy here.

There is also another research report by Kenanga Research (read here), and MIDF Research (read here). But so far, CIMB has the best analysis, in my opinion.

I guess, the banks will now focus on their day-to-day activities. But it may also be a precursor to other banks (such as Malayan Banking Bhd or Maybank) to embark on consolidation exercise.