Abu Dhabi bank has nod for RHB stake

PETALING JAYA: Abu Dhabi Commercial Bank PJSC (ADCB), a Middle Eastern financial services group, has been given the go-ahead by the Finance Ministry to acquire a 25% stake in RHB Capital Bhd (RHB Cap) from the Employees Provident Fund (EPF).
This confirms yesterday’s StarBiz report that ADCB has received approval to acquire the stake. The report also said ADCB would pay RM7.20 to RM7.40 per RHB Cap share.
RHB Cap said in a statement yesterday that the ministry had “granted its approval for EPF to dispose of its 25% equity interest in RHB Cap to ADCB.”
The acquisition would see ADCB emerging as the second-largest shareholder in the financial services group after the EPF, which – with its disposal – would see its stake in the company come down to 57.23%. RHB Cap owns RHB Bank Bhd, the nation’s fourth-largest lender by assets.
RHB Cap has 2.15 billion shares issued as at Friday with a market capitalisation of RM12.38bil. It has banking operations in Brunei, Singapore and Thailand and over 280 retail-banking branches and an Islamic banking subsidiary, RHB Islamic Bank Bhd, which is South-East Asia’s sixth largest.
Reuters had reported last month that ADCB, which is 64.8%-owned by the Abu Dhabi government through the Abu Dhabi Investment Council, was looking to acquire the 25% stake in the company for US$3.88bil.
The EPF, through adviser Goldman Sachs, has been actively scouting for suitable buyers for part of its stake in RHB Cap, which has plans for expansion locally and abroad. It beat Kuwait Finance House, another Middle Eastern financial services group, to acquire the RHB Cap stake last March, but has to sell down its stake in the company to 35% by July to conform to local banking rules.
MIMB Investment Bank Bhd research head Pong Teng Siew said in a research note Friday that Islamic banking income growth boosted the financial services group’s results for the financial year ended Dec 31 (FY07).
“Islamic banking income growth at 39.1% year-on-year featured strongly in boosting FY07 results,” he said.
Pong said fourth-quarter earnings momentum had slowed with earnings up 40% year-on-year and FY07 earnings up 62.7%. “Balance sheet assets expanded just 1.8%,” he added.
Pong said notwithstanding the absence of a lending surge, improved profits were driven by earning a spread above large sums in new low-cost deposits (+31.8% year-on-year), cost control, a 19.1% reduction in loan losses/provisions and a 98% drop in minority interest on acquiring Khazanah Nasional Bhd’s 30% stake in RHB Bank.
“Management is not focusing on loans growth for now. Increasingly stiff competition is chipping away at lending margins, so securing low-cost deposits is seen as the preferred path to boosting lending margins with building fee income,” he said.
The announcement by RHB Cap comes on the heels of Hong Kong-based Primus Pacific Partners Ltd’s agreement to acquire a 20.2% stake in EON Capital Bhd, the parent of EON Bank Bhd, from DRB-HICOM Bhd for RM1.34bil, or RM9.55 a share, in early February. www.thestar.com.my