3 Malaysian banks to merge to create Southeast Asia’s fourth largest bank

KUALA LUMPUR, Malaysia—Three Malaysian banks announced plans on Thursday for a merger to create Southeast Asia’s fourth-biggest commercial lender and a large Islamic bank.

CIMB Group Holdings Berhad, RHB Capital Berhad and Malaysia Building Society Berhad said they have submitted the proposed merger to the country’s central bank.

CIMB, the country’s No. 2 lender, and its smaller rival RHB, ranked fourth, will merge via a share swap, the banks said in a joint statement. The two banks’ Islamic units will then acquire Malaysia Building Society to form a mega Islamic bank, it said.

If approved, the combined entity would pass Malayan Banking Berhad as the country’s biggest commercial bank.

Analysts said it will be the fourth largest in the region after three Singapore banks—DBS Group Holdings, Oversea Chinese Banking Corp. and United Overseas Bank.

“This merger is a natural step in our growth story, enabling us to become a regional financial powerhouse via the merged entity,” RHB managing director Kellee Kam said in the statement.

The banks said they hope to sign an agreement by early 2015 and complete the deal by mid-year.