RHB Capital Bhd (RHBCap), the country's fifth largest banking group, is awaiting central bank approval for its planned takeover of OSK Holdings Bhd's investment banking business. A merger of the two would create the country's largest stockbroker, unseating CIMB Investment Bank Bhd from its current top position.
Both RHBCap and OSK said in separate filings to the stock exchange that they applied for approval from Bank Negara Malaysia (BNM) yesterday.
While they did not divulge details, news reports have speculated that RHBCap, which is 44.8 per cent owned by the Employees Provident Fund, may pay between RM1.8 billion and RM1.9 billion in stock for the investment bank.
BNM had allowed both parties to hold merger talks for three months from October 13 last year.
A merger would immediately help RHBCap build up its investment banking franchise in the region, echoing moves of its larger rivals Malayan Banking Bhd (Maybank) and CIMB Group Holdings Bhd.
Maybank last year bought regional broker Kim Eng to boost its investment banking business while CIMB Group bought Singapore's GK Goh Securities some years earlier and a 70 per cent stake in a Thai brokerage last year.
OSK Investment Bank Bhd has businesses in Singapore, Indonesia, Thailand, Singapore, Cambodia and Hong Kong.
"Besides the immediate expansion of its broking distribution network, RHBCap could tap into OSK's retail strength to distribute equity and debt offerings.
"The merger also provides immediate access to important strategic markets in Singapore (via OSK's 51 per cent-owned subsidiary DMG & Partners Securities Pte Ltd) and Indonesia (via OSK's 51 per cent-owned subsidiary OSK Nusadana Securities).
"In our view, the potential merger of RHBCap and OSK's investment banking business would be a complementary fit," analysts from HwangDBS Vickers Research said in a report last week.
The research house has a "buy" call on RHBCap with a target of RM7.28. The stock closed at RM7.27 yesterday, unchanged from the previous day, while OSK added 4 sen to RM1.84.
Maybank and CIMB Group had each walked away from exploratory merger talks with RHBCap last June.
This was after RHBCap's biggest shareholder, Abu Dhabi Commercial Bank, moved to sell its 25 per cent stake to a sister company at RM10.80 a share, which set the valuation bar too high for a merger to happen.
