Was Malaysia’s mega-bank merger failure a good thing?

CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd (MBSB), which first announced an intention to merge last July, made a joint statement that discussions on the merger have been dropped.  The deal was set to be the biggest banking merger in recent times.The Star quoted the banks as citing un-favourable economic conditions and the inability to “arrive at a value-creating transaction for all stakeholders” as the reasons for dropping the deal.In the joint statement issued yesterday to The Star, CIMB Group acting chief executive officer (CEO) Tengku Datuk Zafrul Tengku Abdul Aziz said: “We had thoroughly deliberated the merger, and whilst we remain convinced that the combination of our three franchises follows sound strategic logic, we ultimately were not able to arrive at a value-creating transaction for all stakeholders.”Last Friday, StarBiz had also reported that there were “cracks in the merger”, citing that there was a problem with MBSB being part of the merger. Industry watchers have indicated that this bodes well for CIMB and RHB Capital.Research house UOB Kay Hian Malaysia Research earlier upgraded both CIMB and RHB Capital to Hold upon speculation of the merger failure. The research house said on Wednesday the merger was a key factor dragging down the sentiment on both stocks, reported on The Star.[Image from Shutterstock]