Maybank, Malaysia's largest lender by assets, is snapping up Singapore broker Kim Eng Holdings for $1.4 billion, in a move to strengthen its grip on the regional stock broking industry and diversify the lender's source of overseas revenue.
The acquisition comes as Southeast Asian markets are on a roll, with Thailand and Indonesia ranking as the best performing major markets in Asia last year, spurred by foreign fund inflows and robust economic growth.
"What Maybank wants to do is expand its stock broking operations, and it makes sense for it to acquire a company which provides immediate exposure," Vincent Khoo, UOB Kay Hian's head of research, said on Thursday.
Investment banking and stock broking are becoming increasingly important for Malaysian banks as stiffer domestic competition puts further pressure on net interest margins on its loans.
Two of the best performing Malaysian banks in 2010 were CIMB Group and RHB Capital , which were top deal makers in terms of number and value respectively.
Maybank and Kim Eng shares both rose nearly 3 percent on Wednesday before trading was suspended on Thursday. Shares in Kim Eng, valued at about $1.3 billion, have risen more than 35 percent since mid-December, when reports emerged of an impending stake sale.
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