Kuala Lumpur: Just a day after the country's fifth largest bank RHB Capital Bhd (RHBCap) got ditched by two suitors, analysts are all abuzz about how it should consider a match with another - AMMB Holdings Bhd. While RHBCap, which is 45 per cent-owned by the Employees Provident Fund, can always pursue growth on a standalone basis, the fact is, it has always been viewed as an attractive takeover target. Having it merge with another would support the country's banking consolidation agenda. RHBCap chief executive Kellee Kam told Dow Jones yesterday that the bank remained interested in merging, but only if it made strategic sense. The country's top two banks, Malayan Banking Bhd (Maybank) and CIMB Group Holdings Bhd, each tried to explore a marriage with RHBCap this month, but concerns over pricing put the brakes on those plans this week. "The two top banks have, in a way, been given the first right of refusal for RHBCap. I'm sure there'll be other attempts to match it with others now," said an analyst from a foreign research firm. RHBCap would make a better fit with AMMB than with either of the other two large banks, he said. "There's definitely more complementarity and less overlap," the analyst remarked. Analysts from OSK Research said it would be "a marriage of equals" and would propel AMMB to being the sixth largest bank from fourth largest now. Their loan market share at home would be larger than Maybank's and their combined branches would come close to the latter's, another analyst pointed out. Should AMMB show some interest, it may rekindle CIMB and Maybank's interest in RHBCap. "It's a defensive move ... they (Maybank/CIMB) can't afford to let someone else have it as it could swing their market position by quite a fair bit. But right now, I think they're having a bit of a timeout on their relationship with RHBCap," the analyst said. The fact is, RHBCap's share price and its shareholders' expectations may first have to come down to more realistic levels before any bank is likely to show interest. Pricing was, after all, the main reason Maybank and CIMB each decided to abort their takeover plans. The deal breaker was Abu Dhabi Commercial Bank's move last Friday in selling its 25 per cent stake in RHBCap to sister company Aabar Investments at a hefty RM10.80 a share, setting the valuation bar too high. At RM10.80, or 2.25 times RHBCap's book value, it was an almost 11 per cent premium over its share price of RM9.75 last Friday. That sale "created certain expectations and we believe that at that valuation, it will be very difficult to be value-enhancing for our stakeholders", Maybank's chief Datuk Seri Abdul Wahid Omar told reporters on the sidelines of an event here yesterday. Asked if he would revisit a merger later down the road, he said, "Not at this juncture," hinting that he wasn't ruling out the possibility. He said the group would pursue organic growth plans in the absence of any merger opportunities. CIMB's chief Datuk Seri Nazir Razak, when asked the same question, said the group's priority was to build an Asean banking platform. "We'll look at all opportunities. Our priority is always overseas but if there are opportunities at home, we will look at them," he told reporters at the same event. RHBCap's share price, which rose to a high of RM9.98 during the merger talks with CIMB and Maybank, fell by 28 sen to RM8.75 yesterday. It was the first time in slightly over a month that it fell below the RM9 mark.
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