MALAYAN Banking Bhd's (Maybank) plan to buy a leading regional brokerage is a long-awaited and good move that will significantly strengthen its brokerage and investment banking reach in Southeast Asia.
Unlike its closest rival CIMB Group Holdings Bhd, Maybank does not have an investment banking and brokerage business outside Malaysia.
CIMB got a headstart as early as 2005 when it bought the stockbroking business of GK Goh Holdings Ltd for S$239 million (RM569 million).
Investors have since been waiting for Maybank to make a catch-up move.
The offer also comes at a time when markets in Southeast Asia are seeing a surge in trading volumes, benefiting from Western funds looking for better returns in emerging markets.
Kim Eng derives the bulk of its earnings from stockbroking activities.
Still, it remains to be seen whether Maybank will be successful in buying all of Kim Eng's shares.
Mitsubishi UFJ Morgan Stanley Securities Co, which owns 29 per cent of the broker, could be a stumbling block as it has yet to indicate if it will let go of its stake.
Maybank's takeover plan involves first buying a 44.6 per cent stake from two other key shareholders, and then making a general offer for the rest of the company's shares.
According to Singapore rules, it needs to have a 90 per cent acceptance threshold before it can compulsorily acquire the rest of the shares. It would be impossible to reach that threshold if Mitsubishi UFJ refuses to sell.
It is also interesting to note that Mitsubishi UFJ belongs to the MUFJ group, whose Bank of Tokyo-Mitsubishi UFJ owns a 5 per cent stake in CIMB.
Maybank chief executive officer Datuk Seri Abdul Wahid Omar said it will soon engage with the Japanese party to find out what its intentions are.
It is understood that if it does not sell, then Maybank will end up as just the controlling shareholder of Kim Eng and will not be able to delist the broker as intended.
Wahid said Maybank will also have to discuss with Kim Eng whether the latter can go ahead with a proposal late last year to acquire 70 per cent of Berjaya Corp's stockbroking unit, Interpac Securities Group.
As it stands, with Kim Eng, Maybank will emerge as a top five broker in Singapore, Thailand, Indonesia and the Philippines, and have an active presence in Hong Kong, Vietnam, New York, London and India.
Wahid said the lender, which late last year was reported to have been interested in regional investment banking group OSK Holdings Bhd, had been scanning the region for suitable targets and found Kim Eng to be the most compelling.
He ruled out buying any more brokerages.
The purchase will also mark Maybank's entry into Thailand. Kim Eng is ranked the top broker there, offering the lender "deep insight" into a market it eventually wants to have a commercial banking presence, Wahid said.
Post-merger, Maybank's investment banking operations including brokerage, will become a larger business driver and is expected to contribute 8 per cent to the group's pre-tax profit compared with 2 per cent before.
The group's overseas contribution to pre-tax profit , meanwhile, will increase to 25 per cent from 21 per cent now. - by Adeline Paul Raj, btimes.com.my
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