Possible merge of RHB and CIMB

KUALA LUMPUR, April 4 (Reuters) - The new owner of Malaysia's fourth-largest lender, RHB Bank, sees larger rival CIMB Bank as a likely merger partner and that together they could become a regional heavyweight, a source close to the situation said.
RHB banking group is being taken over by Malaysia's state pension fund (EPF)after it won a $3.68 billion bid battle last month. The fund has said it aims to sell down its stake and bring in strategic investors to help run and expand the business.
"CIMB and RHB would be a very good fit and a very good consolidation," the source told Reuters, noting that RHB was strong in retail banking, with about 200 branches nationwide, while CIMB was strong in investment and wholesale banking.
"They have a very strong investment bank which RHB can supplement."
The Employees Provident Fund, which manages assets totalling around $80 billion, declined to comment. A CIMB official also declined to comment.
The source described a possible merger with CIMB, Malaysia's second-largest lender and a unit of Bumiputra-Commerce Holdings Bhd , as a more medium-term consideration.
The fund's first priority was to sell down a minority stake in RHB Bank to strategic partners, the source said, adding that it could sell the first 5-10 percent tranche by year-end.
The fund hopes to reduce its holding to 35 percent by the middle of 2008, including at least 25 percent that would be re-floated on the Malaysian stock exchange, the source added.
The fund aims to hire an international investment bank within two months to start a world-wide search for potential partners, the source said, adding that the fund would also need to seek central bank approval to begin multiple-party talks.