By Yantoultra Ngui
SINGAPORE (Reuters) – Malaysia’s second-richest man, Quek Leng Chan, is considering options for his stake in Hong Leong Bank Bhd, including a merger, two sources with knowledge of the matter said, in a move that could trigger broader consolidation in the sector. Quek, 80, is also exploring the possibility of reducing his stake in the Malaysian lender, said the sources, who declined to be named due to the confidential nature of the matter.
Conglomerate Hong Leong Financial Group Bhd, controlled by Quek, has a 62% stake in Hong Leong Bank, the country’s fourth-largest lender with a market value of $10 billion, according to Refinitiv data. Hong Leong Bank and Hong Leong Financial did not respond to multiple queries sent by Reuters and there was also no response from Quek to queries sent through the bank.
It was not immediately clear if Quek had shortlisted candidates for a possible merger or if he had decided on how much of the stake he could sell.
A potential merger could herald the consolidation of Malaysia’s banking sector as a handful of digital banks prepare to launch their services in the Southeast Asian country.
The sources said Quek’s decision comes as the bank’s shares have risen sharply this year and he considers succession issues.
Shares of Hong Leong hit a record high in June and recovered 17% from a five-month low hit in November, outpacing gains in the KL Finance Index.
MINORITY PARTICIPATION
The sources warned that no formal proposal was in the works for Hong Leong Bank and that Quek had not yet made a decision on his next move.
Any potential sale of Hong Leong Bank by Quek, who was estimated by Forbes magazine this year to have a net worth of $10 billion – making him Malaysia’s second-richest man after property investor Robert Kuok – is expected to be for a pious minority, added two of the sources.
Banks in Malaysia are required to obtain approval from the country’s central bank before entering into formal discussions with parties for potential transactions involving the transfer of equity.
Some of the country’s medium and large banks held merger talks more than five years ago, aimed at consolidating the sector, but difficult negotiations and political considerations have stalled the process, according to bankers familiar with the matter.
Bankers say potential job losses are among the main stumbling blocks for any merger in the crowded industry.
In 2014, RHB Bank, the country’s fourth-largest by assets, and its smaller rival AMMB Holdings scrapped merger plans after failing to agree on terms.
Quek purchased Hong Leong Bank, which had record net profit in the year to June 2021, through Hong Leong Financial Group in 1994. It has branches in Singapore and Hong Kong and wholly owned subsidiaries in Vietnam and Cambodia.
(Reporting by Yantoultra Ngui; Editing by Anshuman Daga and David Holmes)