Malaysian lender RHB Capital, which was a takeover target of its bigger rivals until last week, is now aiming to take over the country’s second largest bank CIMB Group, Singapore’s Straits Times reported on Friday.
Citing government and banking sources, the newspaper said the deal was still a work in progress.
It said if the deal was successful, the joint entity would have a market value of around 86 billion ringgit ($28.5 billion), slightly bigger than the about $27 billion of Singapore’s DBS Group, Southeast Asia’s largest lender.
CIMB and RHB were not immediately available for comment.
According to Thomson Reuters data, Malaysian state fund Khazanah holds 28.6 percent of CIMB while the state provident fund EPF holds 11.6 percent.
The merger plan could revive hope for the consolidation of the banking sector in Malaysia where a previous round of mergers in 1998 reduced the number of lenders to 10 from 54.
CIMB, which is more than three times bigger than RHB in terms of market capitalisation, and the country’s biggest lender Maybank, decided last week to scrap their separate plans to acquire RHB in a deal valued around $7 billion.
Maybank and CIMB pulled out after Abu Dhabi Commercial Bank set a high valuation bar when it sold its 25 percent stake in RHB to Aabar Investment at 10.80 ringgit a share.
The price paid by Aabar values RHB at around 23.7 billion ringgit ($7.8 billion), nearly 18 percent above the market value of $6.6 billion at the time when CIMB and Maybank pulled out. Other shareholders would have expected at least that much under a deal.