Major Malaysian funds say banking sector ready for consolidation

SINGAPORE (Reuters) – Malaysia’s overcrowded banking sector can benefit from mergers and acquisitions, executives of the country’s top investment funds told a conference on Monday, seeing opportunities to cut costs and compete with new entrants. in the area. “There are benefits to continuing consolidation,” Rick Ramli, director of private and strategic investments at Permodalan Nasional Bhd (PNB), told a conference hosted by stock exchange operator Bursa Malaysia and Malayan Banking Bhd (Maybank ). “There are still small-scale banks out there, as you think about higher compliance costs (and) non-traditional competition, you need to invest and scale,” Rick said, also noting that investment was needed in systems and the basic technology to go digital. platforms. The comments come as the Malaysian banking sector is expected to become even more competitive following the issuance of five digital banking licenses by the central bank in late April. Citing sources, Reuters reported last week that Malaysia’s second-richest man Quek Leng Chan was considering options for his stake in Hong Leong Bank, including a merger. Amir Hamzah Azizan, CEO of the Employees Provident Fund (EPF), said the Malaysian banking sector has around 26 companies, with the top five lenders holding a combined market share of around 48%. “It’s probably a segment that’s probably due to some form of reconsolidation,” he said. The managing director of sovereign wealth fund Khazanah Nasional, Amirul Feisal Wan Zahir, also said the consolidation made sense, but it depended on timing and prices. “It makes a lot of sense for people to merge and we… see various permutations of that happening,” he said. EPF is the largest shareholder in RHB Bank Bhd with a 42.1% stake, in addition to holding minority stakes in other lenders including Hong Leong Bank and Public Bank Bhd, according to Refinitiv data. PNB is the largest shareholder in Maybank, the country’s largest bank, with a 46.6% stake, while Khazanah is the largest shareholder in second-tier lender CIMB Group Holdings Bhd with a 24.8% stake.