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Wednesday April 11, 2012

Various issues need to be resolved for RHB-OSK merger to proceed

KUALA LUMPUR: Securing the approvals of overseas banking and financial regulators, the search for a “neutral” investment banking head and the need to iron out other “political and management” issues are some of the reasons why the RHB Capital Bhd (RHBCap)-OSK Holdings Bhd merger has yet to be concluded.

Speaking at separate press conferences after the AGMs of their respective companies held yesterday, top officials from RHBCap and OSK shared similar views when asked about the proposed merger.

RHBCap group managing director Kellee Kam said he hoped the proposed merger would be concluded by the third quarter of this year.

“We are actively in dialogue with Bank Negara, part of this is because of the complexities of the transaction which transcends various regional jurisdictions.

At OSK: Ong (left), chairman Datuk Nik Mohamed Din and U fielding questions at a press conference.

“Our current target for the completion of the proposed merger is towards the end of the third quarter, but given the various foreign jurisdictions involved, please allow some flexibility in that,” Kam said.

The proposed merger, which would create the largest stockbroking firm in the country with close to a 15% market share, was first mooted last September.

OSK chief executive officer cum executive director U Chen Hock said Bank Negara and the Securities Commission had additional queries for both RHBCap and OSK after the submission of the documents to the regulators.

“In the run-up from the submission of the application, we, together with RHBCap, have answered some of the queries.

“We have provided all the necessary answers for the queries,” U said, without wanting to disclose what these additional queries were.

OSK director and major shareholder Ong Leong Huat said that whatever the regulators had wanted to know had already been answered. He added that OSK would now wait for the regulators' response.

At RHB: Kam and RHB Bank MD Johati Abdul Muid (right) meeting the media.

“Of course (this deal) has still to get the Finance Ministry's approval even after Bank Negara (and SC) approval as it involves a change of ownership in a bank,” Ong said without giving any timeframes.

U said the proposed merger would not only need the approval from the Malaysian regulators but also required the green light from other foreign regulators in which both groups are operating in.

“We have to clear the domestic regulators first before we move to the next step. We will then need to get approval from regulators in Singapore, Hong Kong, Cambodia, Indonesia and Thailand,” U said.

OSK runs stock-broking businesses in Indonesia, Cambodia, Hong Kong, Thailand and China, while RHB has a presence in Singapore, Thailand and Brunei. RHB is also in the process of acquiring an Indonesian lender.

RHBCap's Kam said: “One of the reasons why we are pretty excited about this merger is that it will help us expand into markets where OSK has a presence in,”

Meanwhile, people close to the proposed merger said RHBCap had been looking to hire a new CEO for the merged investment banking business. “They are looking for a candidate that will be seen as neutral and one who is able to bring together and strengthen the merged investment banking business,” said an industry observer.

At the moment, OSK's investment banking business is seen as more “entrepreneurial-driven” while RHBCap is generally seen as a more “conservative” outfit.

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