RHB Capital To Acquire Bank Mestika For RM1.16 Billion

KUALA LUMPUR, Oct 19 (Bernama) -- RHB Capital Bhd, the country's fourth largest banking group which operates RHB Bank Bhd, is acquiring 80 per cent of Indonesia's PT Bank Mestika Dharma for RM1.16 billion.

The move was in line with the group's aspirations of becoming one of the leading financial services providers in Asean by 2020, RHB Bank's chairman Tan Sri Azlan Zainol, who is also a director of RHB Capital, told a media briefing here today.

A conditional sale and purchase agreement was signed today between RHB Capital and Bank Mestika's owner PT Mestika Benua Mas, which currently holds 99.95 per cent of the issued and paid-up share capital of the bank.

Also present at the signing were RHB Capital's group managing director Datuk Tajuddin Atan and Bank Mestika's president commissioner Witarsa Oemar.Both parties also signed an option agreement for another nine per cent of Bank Mestika for RM131 million, including an additional return of up to 15 per cent annually.

To fund the acquisition, RHB Capital has proposed renounceable rights issue of new RHB Capital shares to raise gross proceeds of about RM1.3 billion.

The acquisition is expected to be completed by the second quarter of next year and have a positive contribution to the group's future earnings.

"This acquisition puts us in a strong position to grow with Indonesia as this nation is poised for further economic success," Azlan said.

"Indonesia's relatively low penetration rate of banking services, with a loan-to-gross domestic product ratio of only 25 per cent against a population of 240 million, offers the banking group immense opportunities," he said.

The venture is also in line with its regional expansion, which currently has its footprint in Singapore, Brunei, Thailand and Vietnam. It is understood that the group is also eyeing the markets of Cambodia, Laos and Vietnam.Azlan also said that RHB Capital was looking to apply for a banking licence in Vietnam and expand its presence in Thailand to become a top three player in Asean by 2020.

Bank Mestika, one of the leading banks in Sumatra, posted a net profit of RM63 million for the financial year ended Dec 31, 2008, and its net assets amounted to RM415 million.

It also had a strong capital adequacy ratio of 26.2 per cent at the end of last year, total assets of RM1.91 billion as of June 30, 2009, and 50 branches and six cash offices across Indonesia.

According to Tajuddin, key focus areas to grow Bank Mestika are strengthening key business enablers, enhance distribution and product capabilities, focus on asset quality and increase fee-based income.

He said RHB Capital was looking to introduce new products such as trade finance, Islamic banking, credit card, Internet banking and wealth management as well as to expand distribution to Java and Kalimantan.

RHB Capital's target is to achieve 40 per cent offshore income by 2017 which will be driven mostly by its Indonesia operations in view of Bank Mestika's profitability and sustainability, Tajuddin said.

Currently, overseas business contributed four per cent to the group's earnings and it is expected to be at 10 per cent by next year, and 20 per cent in 2012.
-- BERNAMA