Malaysia’s ambitious plan to consolidate three state-controlled financial institutions to create the country’s largest banking group is facing the awkward prospect of getting trapped in the crosshairs of Indonesia’s regulatory agencies.
State-controlled CIMB, Malaysia’s most aggressive financial group, is leading a three-way mega-merger that would create Southeast Asia’s fourth largest lender in a deal valued at US$22.3 billion (RM74 billion).
The other players in the deal are state-controlled lenders RHB Capital Bhd, a mid-sized bank, and Malaysia Building Society, a lender specialising in mortgages and the property sector.
But the complex structure for the proposed merger, which was announced last week, is threatening to expose the new merged entity to controversial rules under Indonesia’s banking laws, which require foreign banks operating in the region’s largest economy to sell down their holdings in domestic banks to 40% within a decade.
Malaysia’s CIMB is one of three foreign banks which own controlling stakes in Indonesian lenders.
It controls 97.9% of CIMB Niaga, one of Indonesia’s major lenders, but the bank has been spared from having to comply with the ownership cap on foreign shareholding because it acquired its banking assets before the new laws were introduced in 2012.
That premise, however, is looking shaky under the proposed structure of the mega-merger announced last week.
- TMI
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