KUALA LUMPUR -- CIMB Group Holdings, RHB Capital and Malaysia Building Society agreed Thursday to merge to form Malaysia's largest bank and a major Islamic bank.
With combined assets of $190 billion, the three banks will overtake Maybank's $179 billion as Southeast Asia's fourth largest bank.
"This exercise will cement CIMB's position amongst the top banks in Southeast Asia and bring a host of value creation opportunities for all our stakeholders," said CIMB Acting Chief Executive Officer Zafrul Abdul Aziz at a press release on Thursday.
The merger involves a share swap on a 1:1.38 ratio between RHB and CIMB, based on a benchmark price of 10.03 ringgit ($3.10) per RHB share and 7.27 ringgit per CIMB share. After the merger, CIMB will own 70% of the new entity and RHB the rest.
Alongside, both CIMB and RHB have Islamic banking subsidiaries that will merge with Malaysia Building Society, a small-sized lender serving mainly civil servants, to form a an Islamic bank with total assets of 117 million ringgit.
Pending regulatory approval, the three banks hope to complete the deal in the middle of 2015.
State-investment fund Khazanah Nasional, a major shareholder, holds 28.3% in CIMB. Malaysia's state pension fund also owns major stakes in all the three banks.
CIMB is currently the second-largest lender by assets in Malaysia. It also has a strong presence in Indonesia with CIMB Niaga and in Thailand with CIMB Thai.
Analysts suggest the enlarged financial group and enhanced balance should provide CIMB with more financial muscle to pursue regional acquisitions.