KUALA LUMPUR, March 1 (Reuters) - CIMB Group Holdings Bhd is in exclusive talks with Royal Bank of Scotland to acquire some of its Asia Pacific cash equities and investment banking businesses, as part of the Malaysian bank’s efforts to spur growth outside its home market.
The acquisition by Malaysian’s second largest listed lender by assets could be a shot in the arm for CIMB’s chief executive, Nazir Razak, who has outlined ambitious plans for his group to emerge as a leading Asian financial services firm.
But CIMB will be faced with the challenge of taking on more than a handful of expensive staff as cash equities struggle to make profits.
“The Memorandum of Understanding provides for the parties to negotiate exclusively with each other and finalise the scope and terms of a sale and purchase agreement,” CIMB said in a statement on Thursday.
It said it would make further announcements on this proposed transaction. The company did not provide any details of the valuation of the transaction.
A significant chunk of RBS’ operations are located in Hong Kong, Singapore, Australia and India and it has offices in 11 countries across the region, including China.
The auction for the Asian assets of RBS had attracted interest from firms including Bank of China and Japan’s Mizuho Financial.
RBS has halved the size of its investment bank as part of a major retreat since its 2008 taxpayer bailout, and has been forced by the government and the lower profitability across the industry to extend the retreat further.
Last month, Malaysian financial daily, the Edge, reported that CIMB is set to buy the Australian equity operations of RBS for $50 million.
RBS was ranked No. 12 in the Asia Pacific M&A league tables, last year, excluding Japan, and No. 18 in equity underwriting, according to Thomson Reuters data. The bank was ranked tenth in Asian G3 Currency Bonds (ex-Japan, ex-Australia) the data show. (Reporting by Anshuman Daga; Editing by Niluksi Koswanage)