By Ying Xian Wong
Malaysian lender RHB Bank has received the green light from the central bank to start talks on the potential sale of its insurance business to a unit of Japanese insurance group Tokio Marine.
Bank Negara Malaysia has given the two companies six months to conclude the discussions, RHB Bank said in a bourse filing late Monday.
If a deal happens, the lender could sell its entire holding in RHB Insurance to the Japanese company to be merged with its local business, Tokio Marine Insurans (Malaysia). RHB Bank could hold a stake of up 35% stake in the combined entity, it said.
Any definitive agreement will require approval from Malaysia's finance minister.
A merger of Tokio Marine Insurans Malaysia and RHB Insurance would create Malaysia's fifth-largest general insurer by assets and the fourth-largest by net profit, Maybank Investment Bank analyst Desmond Ch'ng said in a note.
He sees the such a combination as a win-win that would clear foreign-ownership hurdles for the Japanese firm in Malaysia, while giving RHB Bank economies of scale.
The talks rekindle a past attempt to unite the two businesses, which fell through in 2019 after the two side failed to agree on terms.
Prospects for a concrete deal seem stronger this time, CIMB Securities analysts said, though discussion are still in the very early stages, and the outcome will depend on pricing and merger synergies.
In CIMB Securities' view, a merger would unlock the value of RHB's general insurance business and create a competitive insurer with a near-10% share of the Malaysian market.
The proposed structure also aligns with a broader regional trend of banks shifting toward distribution-led bancassurance and capital-light fee models, CIMB Securities' Ei Leen Tan said in a note.
Write to Ying Xian Wong at yingxian.wong@wsj.com
(END) Dow Jones Newswires
05-11-26 2226ET
