Putrajaya facing backlash over proposed mega-bank merger

By admin-s On Jul 16, 2014

(TMI) – Putrajaya is now facing significant backlash over the proposed merger of CIMB Bank, RHB Bank and Malaysian Building Society Bhd (MBSB), with Malaysia’s national banking union, Umno warlords and the Abu Dhabi government lining up against the deal that would form the country’s largest bank.

The Malaysian Insider understands that Abu Dhabi had sent a special envoy to Putrajaya to convey unhappiness over the merger, saying that market forces should determine best price for RHB shares of which it owns 21.4%.

Sources said the message sent from Abu Dhabi to Putrajaya is that they will also reconsider multi-billion ringgit oil storage programme in the Petronas Rapid project in Johor if the bank merger goes through without considering the Gulf nation’s interests.

They said Abu Dhabi’s Aabar Investments PJS, which holds the RHB shares, will not agree to any deal below RM12 per share, which is the total cost incurred by Aabar when it acquired the shares from Abu Dhabi Commercial Bank in 2011.

The Gulf country is also not happy with the 90-day exclusivity given to CIMB Bank to negotiate the deal, which would create mega-bank with assets of RM613.7 billion, dwarfing current top Malaysian lender Maybank Bhd’s RM578 billion.

National Union of Bank Employees (NUBE) president Tan Eng Hong expressed disappointment with Bank Negara that it was not consulted over the proposed merger, saying last week that he feared job losses that happened in previous mergers.

Politically, Umno warlords have been grumbling about having to constantly fight opposition attacks on nepotism, pointing out that the top executive in CIMB is Prime Minister Datuk Seri Najib Razak’s youngest brother, Datuk Seri Nazir Razak.

Nazir has been instrumental in CIMB’s previous mergers and acquisition deal for Southern Bank Bhd. The bank recently announced that Nazir will be made bank chairman while it sought his replacement by September.

But some Umno warlords are wondering why Nazir was appointed to state asset manager Khazanah Nasional Bhd’ board or was allowed to push the merger deal, saying it would not look so bad if Putrajaya had asked state-owned Maybank to conduct the merger with RHB and MBSB.