CIMB not keen on acquiring RHB for now

KUALA LUMPUR: CIMB Group Holdings Bhd has reiterated that it is not looking to buy smaller rival RHB Capital Bhd at this time.


"I don't think RHB is on the table at this time," chief executive officer Datuk Seri Nazir Razak told repor-ters on the sidelines of the Forbes Global CEO Conference here yesterday.

Four months ago, CIMB Group, Malaysia's second-largest bank by assets, and its larger rival Malayan Banking Bhd were in separate merger talks with RHB Capital. The talks, however, failed within a month, mainly due to pricing.

Nazir was responding to market talk of Abu Dhabi fund Aabar considering a writedown of its US$1.9 billion (RM5.9 billion) purchase of a 25 per cent stake in RHB Capital, after the deal's rich pricing scuppered a long-awaited consolidation in the banking sector.

Three weeks ago, it was reported that Aabar, the largest single stake owner in both Daimler and commodities giant Glencore, has internally discussed valuing the deal lower to encourage Maybank and CIMB to come back with an offer for RHB.

Just last week, the UK's Independent Commission on Banking insisted that banks hold core capital of at least 10 per cent in their domestic retail operations. It also set a higher benchmark than other European reforms with a requirement that banks hold primary loss-absorbing capital of between 17 and 20 per cent - a level which only the Swiss plan to introduce.

By comparison, a new global regulation due to come into force in 2019 asks banks to hold a minimum of 7 per cent in quality capital, or a likely 9.5 per cent for the biggest.

When asked to comment, Nazir said, "This will be yet another opportunity for Asian banks to grow their market share. This will be watershed development in capitalism, as a whole. No one really knows what the outcome is going to be."

"But certainly from a banking perspective, we are seeing tremendous change in the banking landscape. The differing behaviour of various regulators will pose challenges and opportunities. For instance, the banking reform proposed by the UK is dramatic. It is going to make UK banks less competitive.

"That could then give an opportunity for other European banks versus UK banks ... also Asian banks versus UK banks. It is actually incredibly exciting if you like to think about how to position Asian banks in this environment," he added.

Nazir sees the ongoing European sovereign debt crises and political revolution in several Middle Eastern countries providing good prospects for CIMB Group to further expand its presence in the international banking scene.

"Many of the European banking groups are in a recovery mode and this presents an opportunity for more innovative products. This is where Islamic banking can fill the need. These development create growth opportunities for us to expand our operations, whether it is in Europe or the Middle East region," he said.