Maybank closes in on Kim Eng brokerage

Malaysia’s biggest bank by assets has offered $1.4bn for one of Singapore’s largest brokerages in a deal that would give it a top five position in the securities industry in south-east Asia’s five biggest economies.

Malayan Banking, which trades as Maybank, said on Thursday that it had agreed to pay S$798m ($617m) for two parcels of shares amounting to a 44.6 per cent stake in Kim Eng Holdings, a leading south-east Asian broker.

The deal, which is subject to regulatory approval in Singapore and Malaysia, would trigger a general offer for the company if it goes through. Maybank’s offer of S$3.10 per share – representing a 14.8 per cent premium to Kim Eng’s last closing price – would value the company at S$1.79bn.

The move marks a return to international expansion for Maybank, which significantly expanded its international network in 2008 by buying stakes in Bank Internasional Indonesia, An Binh Bank of Vietnam and MCB Bank of Pakistan.

Maybank, which is being advised by Nomura and its own investment banking arm, said it viewed Kim Eng’s operations in Singapore, Thailand, Indonesia and the Philippines as a way of accelerating regional expansion from its Malaysian base.

Maybank has a strong commercial banking presence in south-east Asia, but its stockbroking and investment banking businesses are currently limited to Malaysia.

Kim Eng also has a securities operation in Vietnam, and a small regional investment banking business that will complement Maybank’s commercial banking operations. Importantly, the deal gives Maybank a presence in Thailand for the first time.

Megat Zaharuddin Megat Mohd Nor, Maybank’s chairman, said the deal was a “leap forward” for the bank. “It gives us the immediate platform to aggressively build up our global wholesale banking capabilities in the Association of South East Asian Nations and beyond,” he said.

The acquisition reflects the relatively strong finances of Asian banks.

Abdul Wahid Omar, chief executive, said the bank might raise up to M$500m (US$162m) through a bond issue, although the transaction will have little impact on Maybank’s capital adequacy ratios.

Analyst comment was mixed. Rachel Huang, analyst at AmResearch in Kuala Lumpur, said that while the acquisition would allow Maybank to expand its regional investment banking, the cost could reduce the likelihood of higher dividends.