Rashid Hussain Bank Bhd and Bank Utama Malaysia Bhd today inked an agreement to merge after almost a year of tough negotiations.
"We believe the merger is win, win, win for all parties. Six ringgit per share was what I negotiated for. That is what I got," a beaming Abdul Rashid Hussain, executive chairman of RHB Group told reporters.
"I have agreed to sell my entire block of shares in RHB to Utama... (the money received from the sale) will be used to address my financial commitments," said Abdul Rashid, who holds a 24 percent stake in RHB.
Abdul Rashid said the merger would take at least six months to complete, after which he would retire. RHB is Malaysia's third largest bank.
"I will retire when the merger is completed and when I get the money. I want to make sure a smooth transition and I am committed to it," he said.
Formal negotiations between the two banks began last April but talks collapsed over differences in pricing.
This forced Prime Minister Dr Mahathir Mohamad, who is the finance minister, to issue an ultimatum to Bank Utama in January to find a merger partner or have its banking licence revoked.
"We have given them six months. And unfortunately if they don't, we will have to cancel their licence," Mahathir said at the time.
Under a sweeping consolidation program, Malaysia's 54 banks merged into 10 anchor groups by Dec 31, 2000, except for Bank Utama.
Mahathir last year hinted Malaysia, which has resisted pressure to allow new players into its banking sector, may liberalise the sector by 2007 and warned bankers to upgrade their skills to remain competitive.