Key players in the proposed merger exercise

The Employees Provident Fund

THE EPF, being the controlling shareholder of RHB Bank Bhd with a 40.8% stake, is expected to drive the proposed merger between the two banks.

The provident fund is also a minor shareholder of AMMB Holdings Bhd with a 9.9% stake.

Bankers say that with a stake of less than 10% in the latter, the fund will be able to vote during AMMB’s EGM to get the shareholders’ nod for the deal to proceed. With a simple majority of 50% plus one share needed on RHB’s shareholders side, the provident fund’s 40% block of shares has more influence to effectuate the deal if other funds and minority shareholders vote in favour of the proposed deal.

EPF first made its entry into RHB in 2007 in a deal valued at 1.8 times book value, thereafter raising its stake to over 80% after a general offer.

Coincidentally, the EPF-controlled Malaysia Building Society Bhd – in which it is the single-largest shareholder with a 65.4% stake – is also in negotiations with Middle East-based Asian Finance Bank Bhd for a potential merger.

Australia and New Zealand Banking Group Ltd

MELBOURNE-BASED Australia and New Zealand Banking Group Ltd (ANZ) has reportedly said it wants to sell its stakes in South-East Asian businesses to focus on its home market.

In January this year, ANZ announced the sale of its 20% stake in Shanghai Rural Commercial Bank to two Chinese entities for A$1.8bil, equating to 0.94 times book value.

The banking group also owns 12% of Bank of Tianjin and 39% of PT Bank Pan Indonesia Tbk or Panin Bank.

In May last year, ANZ wrote down its investment in AMMB to 0.9 times book value, fuelling speculation that the banking group might be willing to relinquish its stake in AMMB for as low as one times book value.

It had bought into AMMB in 2006 in two tranches averaging RM3.63 a share or RM2.58bil, which means that it is sitting on a comfortable margin based on AMMB’s closing price of RM5.09 yesterday.

ANZ came into AMMB at 1.96 times price-to-book.

Over the last two years, ANZ has been reducing its presence in AMMB.

The last ANZ chief executive to head the bank was Ashok Ramamurthy, who returned to Australia in 2015.

On June 1, Mandy Jean Simpson stepped down as chief financial officer after an almost seven-year stint at the banking group.

When ANZ was running the show at AMMB, it paid a lot of attention to derisking the bank as opposed to aggressively building the business.

Tan Sri Azman Hashim

WHEN Azman announced his planned retirement from a number of boards he sits on within the AMMB group, it was read by many as a signal that he may eventually exit or pare his shareholding in the banking group he founded.

The seasoned banker had not too long ago reportedly said that he was open to selling his stake, as none of his family members played an active role in the bank.

Azman’s children are, however, involved at the Amcorp Group Bhd level.

The 78-year-old Azman, who has an effective 12.97% stake in the banking group, is among a handful of founders who are still helming their respective companies in an era where shareholdings and even management of banks have been institutionalised.

It is said a stake sale of ANZ’s strategic block would need to have the “tacit consent” of Azman.

Aabar Investments PJS

ABU Dhabi sovereign fund, Aabar Investments PJS, which has a 17.69% stake in RHB, was a stumbling block to the proposed mega-merger of CIMB Group Holdings Bhd, RHB and MBSB two years ago because it had sought a high exit price.

Aabar’s stake in RHB was a result of a deal sealed with sister company, Abu Dhabi Commercial Bank (ADCB), whereby the latter sold its block to Aabar for RM5.9bil or RM10.80 per share, valuing the bank at a hefty 2.25 times its book value.

The transaction came about at the time when Malayan Banking Bhd and CIMB were locked in a fight to wrest control of RHB Capital Bhd.

According to reports, Bank Negara had imposed that Aabar must support the possible merger of RHB with a local bank at a “market price” that would not weaken the merged entity.

ADCB had bought its 25% block from the EPF in 2008 for RM3.87bil or RM7.20 per share, emerging as the second-largest shareholder in the bank. Although the ADCB-Aabar deal was largely seen as a left-to-right hand transfer, it had set the floor price for any merger involving RHB.

Many are of the view that Aabar could be looking to exit if the deal is attractive. Recall that the fund did not participate in RHB’s recent rights issue diluting its stake to 17.8% currently.

Aabar, a unit of International Petroleum Investment Company, recently merged with Mubadala Development to form a new entity, Mubadala Investment Company.

Tan Sri Ong Leong Huat

ONG is a director of RHB Bank, in which he has a 10.13% interest through OSK Holdings Bhd.

RHB has a strong franchise in investment banking, following its acquisition of OSK Investment Bank in 2012 for RM1.95bil from the veteran stockbroker.

Since then, Ong’s OSK group has focused on the property sector.

According to sources, the tycoon was said to be looking at a cash option to exit RHB.

So, he may or may not stay on as a shareholder.