RHBCap eyes S-E Asian banks, keen on Mestika

RHB Capital is still interested in buying PT Bank Mestika Dharma and hopes to complete it at the latest, in the fourth quarter


Kuala Lumpur: RHB Capital Bhd (RHBCap), which is on the lookout for acquisitions in Southeast Asia, is still keen on buying PT Bank Mestika Dharma, an official said, quashing speculation that it may drop the deal as Indonesia looks to cap foreign ownership in banks.

"No, we're still interested. We're hoping it can be completed at the end of the third quarter, or at the latest, fourth quarter.

"We're very positive on making an entry into Indonesia. We're also looking at other countries in Asean (as) we would like to expand the international part of our business to be a much bigger part of the group," Renzo Viegas, managing director of the group's banking unit RHB Bank Bhd, told Business Times.

Indonesia is considering limiting foreign shareholding in banks to less than 50 per cent, according to news reports in the last few weeks citing officials from the Indonesian central bank.

The new policy, if approved, may be implemented in the final quarter of this year, it was reported.

Analysts have said this may spook RHBCap, which first announced it wanted to buy 80 per cent of small Medan-based Bank Mestika for some RM1.16 billion in October 2009, out of a deal.

"Banks like RHBCap may back out of their deals or re-negotiate on price if this rule is implemented," said an analyst from a foreign research firm here.

Still, there is much uncertainty surrounding this possible new regulation and how it may be implemented, if at all.

"The new policy has not been announced and is in discussion stage," Viegas pointed out. Currently, foreign investors can hold up to a 99.9 per cent stake in banks.

RHBCap's plan to buy Bank Mestika has run into numerous delays due to queries from the Indonesian central bank relating to disclosure and the structure of the deal.

In December last year, changes were made to the structure, with RHB Bank - the banking unit - now being proposed as the entity to undertake the purchase.

The deal, which is to be funded via a RM1.3 billion renounceable rights issue, is now pending regulatory approval from Indonesia.

The group has until year-end to complete the deal, based on its sale and purchase agreement with Bank Mestika. "The window is that much, so we don't have to rush," Viegas remarked.

The deal is critical to RHBCap's ambition to grow its international business. It has said it aims to boost profit contribution from the international operations to as much as 10 per cent this year, from below 5 per cent now.

On its plan to buy banking stakes in other Asean countries, Viegas said: "We're always looking out (for opportunities)." The group already has a brokerage licence in Vietnam.

Analysts, however, continue to see RHBCap, the country's fifth largest lender, as a possible takeover target even as it looks to expand.

Last month, Malayan Banking Bhd and CIMB Group Holdings Bhd aborted their separate plans to buy the group after its largest shareholder, Abu Dhabi Commercial Bank, sold its 25 per cent stake to a sister company at RM10.80 a share, setting the valuation bar too high for a merger to happen.

RHBCap, which last traded at RM9.09 in the stock market, has since said it remains open to merger opportunities if the price is right.

According to Viegas, it has been "business as usual" at the group and brushed off talk that it is losing numerous staff.

"Not really ... we've lost a few people in the investment bank, that's all, not even a handful," he said, adding that the group has also been adding more staff as it expands certain businesses like its Easy banking kiosks.

The group has some 11,500 employees.