A potential bidding war for a Malaysian lender could be lucrative for Abu Dhabi Commercial Bank (ADCB).
RHB Capitalof Malaysia has received offers from two competing banks to merge. ADCB owns 25 per cent of RHB Capital and its holdings could increase in value if the competition heats up.
CIMB Group Holdings and Malayan Banking won central bank approval yesterday to begin separate merger talks on RHB Capital, triggering a battle to create South East Asia's largest lender. The banks have three months to complete the negotiations.
Maybank, Malaysia's largest lender, and CIMB, which is headed by Datuk Seri Nazir Raza, the Malaysian prime minister's brother, are aiming to strengthen their dominance as the country's central bank grants more licences to overseas lenders.
A merger of CIMB and RHB would produce a combined capitalisation of US$27.3 billion while Maybank could increase its market worth to $28.8bn. Singapore's DBS Group Holdings, valued at $27.7bn, is currently South East Asia's largest lender.
"With a potential merger between RHB and either Maybank or CIMB, ADCB may realise a higher exit price," said Jaap Meijer, an analyst at Alembic HC Securities in Dubai. "Both banks should be able to offer prices higher than current market value" for RHB.
On the Bursa Malaysia, RHB Capital shares rose to a 14-year high yesterday, up 8.4 per cent to 9.99 ringgit. ADCB rose 0.3 per cent to Dh2.92 and shares of the lender have added 7.3 per cent since the start of this week.
ADCB has appointed Goldman Sachs and Merrill Lynch to advise on an exit, Ala'a Eraiqat, the lender's chief executive, said in April.
A Malaysian newspaper, The Star, reported ADCB may sell its stake to Abu Dhabi Investment Council.