RHB to swallow CIMB, MBSB?

(The Rakyat Post) - One critical element has yet to be fully addressed in last week’s plan to create a mega-Islamic bank via the merger of CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysian Building Society Bhd (MBSB) – the 21.6% stake held by Abu Dhabi government investment body Aabar Investments PJS.

The omission of how this Aabar stake will be handled is especially compelling, given that it has often been cited as the main reason why CIMB Group and Malayan Banking Bhd called off their attempts to buy up RHB Capital in 2011.

The lack of any official comment by Aabar in the past week is rather telling and its track record of rarely exiting any of its investments could mean Aabar probably has a bigger plan for its RHB Capital stake that has yet to become public.

What Aabar’s as-yet-undisclosed plan is could be the key to how the merger proposal, which has taken everyone by surprise, somehow secured swift approval from Bank Negara Malaysia (BNM) for negotiations to take place within an exclusive 90-day period, with a further time extension allowed.

Without any idea of what the bigger picture is, and how Aabar fits into the overall scheme of things, there have already been a number of parties which have expressed concern over how the merger could be negative for CIMB Group.

Even international bodies like Moody’s Investors Service and Fitch have issued cautions on how CIMB Group will be impacted, while stating the proposal would be positive for both RHB Capital and MBSB.

If so, why would CIMB Group want to be part of this merger proposal? It doesn’t exactly need to acquire local banks as it is already an Asia-wide entity capable of buying up prospects in any country it’s already operating in and beyond.

And assuming that CIMB Group is taking the lead in this merger plan, why would its president and group chief executive officer Datuk Seri Nazir Razak be relinquishing his executive post and moving to Khazanah Nasional Bhd – instead of staying on to head the enlarged entity?

With so many pieces of the puzzle still missing – including how staff redeployment and client management will be handled, plus the whole deal not making much commercial sense as yet – all available clues point towards bigger forces holding sway rather than just the three entities involved.

This is where the Employees Provident Fund (EPF) – which has significant stakes in CIMB Group, RHB Capital and MBSB – and Aabar are likely in the driving seat for the merger, and possibly acting as proxies for the Malaysian and Abu Dhabi governments to jointly set up the mega Islamic bank.

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