Magazine article Global Finance

M&A Deal of the Month: Malaysia's Rashid Hussain

Magazine article Global Finance

M&A Deal of the Month: Malaysia's Rashid Hussain

Article excerpt

All of Asia was abuzz last month over a M$2.6 billion (US$850 million) plan that will put Malaysia's premier stockbroker, Rashid Hussain, in charge of the country's second most profitable commercial bank. The deal-the biggest bank acquisition in Malaysia's history-is a complex one, but essentially Rashid Hussain is acquiring a 75% stake in Kwong Yik Bank from the country's biggest commercial bank, state-controlled Malayan Banking (Maybank), which has to comply with a regulation banning one company from owning two banking licenses.

Major M&A deals are rare among Asian banks-yet sorely needed. Most banking sectors, opened to private competition only since the late 1980s, are too rickety, with too many small banks and no real rivals to state-owned giants such as Maybank. Domestic bankers in Indonesia, Malaysia, Taiwan, Thailand, and the Philippines need to develop better capital structures and more sophistication if they are to operate regionally against the big Hongkong and Japanese lenders.

Rashid Hussain already has a commercial banking arm, DCB Holdings, but DCB is top-heavy with corporate business. Kwong Yik has a strong retail network of 88 branches and a capital adequacy ratio of 17% compared to DCB's 9%. "Retail deposits are cheaper, and customers are less price elastic, so margins on loans are more stable," points out Franklin Tan, a banking analyst with Arab-Malaysia Securities. Combined, Kwong Yik and DCB will form Malaysia's third-largest bank, with more than 160 branches and assets of M$32 billion. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.