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Too soon to say bank merger will lead to retrenchment, says Azman

Free Malaysia Today logo Free Malaysia Today 4 days ago Nora Jaswa
Azman-Hashim_ambanknew003 © Provided by MToday News Sdn Bhd Azman-Hashim_ambanknew003

KUALA LUMPUR: It is too soon to tell if there is going to be retrenchment or downsizing in AmBank Group and RHB Bank following the merger process.

Ambank Group chairman and founder Azman Hashim said the merger had to proceed first.

“We do not know the shape of what it will be. It is too early to say,” he said to the media after presenting the Azman Hashim–International Islamic University of Malaysia (IIUM) scholarships here today.

On June 1, RHB Bank Berhad and AmBank announced that Bank Negara had given them approval to commence discussions for a proposed merger.

They have signed an exclusivity agreement, which will expire on Aug 30.

It is understood that RHB would be the acquirer in the merger, estimated to be valued at US$9 billion (RM38.59 billion).

Both banks have a combined headcount of 25,000 employees.

The plan had led to the National Union of Bank Employees (NUBE) to question the banks’ merger, saying RHB Bank was in breach of an agreement requiring it to consult with the union.

“There is simply no reason to disregard the union, collective agreement and workers. The workers of this country are the main reason for our economic growth and cannot be repaid in this fashion,” NUBE secretary-general J Solomon had said.

He said the agreement required RHB to consult with the union, but added that NUBE “had only learnt about the planned merger through media reports”.

Economists also expressed their concern that thousands could lose their jobs, at a time when banks were already downsizing.

“Even though the economy is improving, it is not at a rate that can generate sufficient employment,” Yeah Kim Leng, professor at Sunway University Business School, told FMT recently.

Another economist, Hoo Ke Ping, suggested there should be retraining for the affected workers and they should be reassigned to perform sales and online banking operations.

“There is a need for a sales force in banks,” he said. “Most banks are now training their tellers to do sales.”

The merger between RHB and Ambank would create the fourth largest bank in Malaysia with total assets of RM365.9 billion, slightly below Public Bank’s RM380.1 billion.

Though the merger would clearly see synergy in cost efficiency, Azman also defended the merger on claims that both banks would not reach any synergy in terms of revenue streams and offerings.

Ambank is one of the biggest lenders for car loans in Malaysia and currently focuses its growth in property and SME (small-medium enterprise) loans.

RHB has a strong franchise in investment banking and is keen to expand its wings in the SME segment.

One of RHB’s key drivers for loan growth are property loans.

“We will fill in the gaps. But certainly there will be synergies,” said Azman.

He said the merger of the two banks will only make the banks stronger.

“It is a win-win situation. We will be bigger in capacity (size) and the risk is bigger. So it is more competitive,” added Azman.

Earlier, Azman presented 10 undergraduate students scholarships that provide each student with a monthly allowance of RM600, annual book allowance of RM500 and a notebook worth RM2,500 for their use throughout their four years’ of undergraduate studies.

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