CIMB Group Holdings Bhd, Malaysia’s No.2 lender, said on Monday it is paying $140 million for some Asian units of Royal Bank of Scotland Plc (RBS) to expand its footprint throughout Asia.
CIMB’s acquisition comes as Southeast Asia’s largest bank, DBS Group, struck a $7.2 billion deal on Monday for Bank Danamon in Indonesia, signaling the race is on to build an Asian banking empire.
“This acquisition takes CIMB to the next level,” CIMB’s chief executive, Nazir Razak, told reporters. “We will have seats in nine exchanges and partnerships in three others. Our research will cover approximately 1,093 Asia-Pacific based companies and we will see a big interest in global institutional investors relationships.”
The deal covers the cash equities businesses in Australia, China, Hong Kong, India and Taiwan and includes the cash equities sales desks in the UK and United States. It also covers equity capital markets and mergers & acquisition businesses in Australia and China, Hong Kong, India, Indonesia, Malaysia, Singapore, Taiwan and Thailand. There were some small interests in Australia and China that were not included in the deal.
The deal follows a month of exclusive talks with the British lender. CIMB will pay RBS 431.8 million ringgit ($140.95 million) and then inject 417.6 million ringgit of capital into operating entities in Asia. In a separate statement, RBS said CIMB would pay about 75 million pounds ($119.83 million), Reuters reported.
Nazir said the acquisition will be completed by November and is expected to contribute to CIMB’s earnings next year.
CIMB also expects 350 to 400 staff from the struggling British lender to join the enlarged CIMB business. Nazir said CIMB had asked 94 RBS senior officials to join with 87 percent accepting the offer. RBS earlier said 70 staff would be fired after it closes its equity capital market and corporate finance units in South Korea and cash equities business in Indonesia, Singapore and Korea.
As these assets were not on offer, analysts said this move would shed some light on where CIMB wanted to expand its footprint.