Banks Allowed To Talk To Multiple Parties

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Nov 16 2006
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According to latest news from Business Times, banks can now negotiate potential mergers and acquisitions with multiple parties at the same time. Bank Negara said parties intending to enter into negotiation for the acquisition or disposal of 5 per cent or more of financial institutions can submit their intention with more than one party simultaneously.

The central bank said the move was in line with the transition of the financial system into a more deregulated environment. Utama Banking group director Datuk Vaseehar Hassan Abdul Razack told Business Times that doing away with the existing rule of negotiating with only one party at a time, augured well for the Malaysian capital market.

FinanceTwitter is surprised on the timing of this new ruling. Why now ? Why only after the takeover of Southern Bank Bhd by CIMB Group, the country’s second biggest financial group (one of the most high-profile deals) ? It was reported that Maybank (the largest bank in Malaysia) was interested in talking to the now-defunct Southern Bank Bhd earlier.

It is interesting to note that Datuk Nazir Razak, chief executive officer of the CIMB Group is the brother of current Deputy Prime Minister, Najib Razak.

Heck, any sellers (regardless of products or services) know that to command the best price, multiple negotiations with interested parties are the normal things to do.

Market is rife with speculation of potential deals involving, among others, EON Bank, RHB Bank and AMMB. So, could this new ruling put to the table in order for these banks to get the highest bid possible ? If indeed it’s true then my bet is the interested party has to be a foreigner. So, it pays to watch out on the above three banks stock price.

Some of the banking groups in Malaysia currently including Maybank, CIMB Group, Public Bank, RHB Bank, AMMB, Hong Leong Bank, EON Capital, Affin Holdings and Bank Islam.

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