October 1, 2022
A view of town skyline in Kuala Lumpur Malaysia July 2, 2020.

Malaysia’s second-richest man Quek Leng Chan is weighing choices for his stake in Hong Leong Financial institution Bhd, together with a merger, two sources with information of the matter mentioned, in a transfer that might set off wider consolidation within the sector.Quek, 80, can also be exploring the potential of decreasing his stake within the Malaysian lender, mentioned the sources who declined to be named as a result of confidential nature of the matter.

Conglomerate Hong Leong Monetary Group Bhd, managed by Quek, holds a 62% stake in Hong Leong Financial institution, the nation’s fourth-largest lender with a market worth of $10 billion, based on Refinitiv knowledge.

Hong Leong Financial institution and Hong Leong Monetary didn’t reply to a number of queries despatched by Reuters and there was additionally no response from Quek to queries despatched by the financial institution.

It was not instantly clear if Quek has shortlisted candidates for a possible merger or has determined how a lot of the stake he might promote.

A possible merger might herald consolidation within the Malaysian banking sector at a time when a handful of digital banks are getting ready to launch their providers within the Southeast Asian nation.

The sources mentioned the transfer by Quek comes because the financial institution’s shares have risen sharply this yr and he considers succession points.

Hong Leong’s shares hit a document in June and have recovered 17% from a five-month low hit in November, outpacing positive aspects within the KL Finance index.

MINORITY STAKE

The sources cautioned there was no formal proposal underway for Hong Leong Financial institution and that Quek has not but taken any resolution on his subsequent transfer.

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Any potential sell-down in Hong Leong Financial institution by Quek, who was estimated by Forbes journal this yr to have a web price of $10 billion – making him Malaysia’s second-richest man after actual property investor Robert Kuok – is predicted to be for a minority stake, two of the sources added.

Banks in Malaysia are required to hunt approval from the nation’s central financial institution earlier than participating in formal discussions with events for potential transactions involving the switch of a stake.

A few of the nation’s mid-to-large banks held merger talks greater than 5 years in the past, aimed toward consolidating the sector, however tough negotiations and political concerns stalled the method, bankers acquainted with the matter say.

Bankers say potential job losses are among the many key obstacles for any mergers within the crowded trade.

In 2014 RHB Financial institution, the nation’s fourth-largest by belongings, and smaller rival AMMB Holdings dropped merger plans after failing to agree on phrases.

Quek purchased Hong Leong Financial institution, which posted a document web revenue within the yr to June 2021, by way of Hong Leong Monetary Group in 1994. It has branches in Singapore and Hong Kong and fully-owned subsidiaries in Vietnam and Cambodia.

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