Case Study: Cimb Relationship With Southern Bank Berhad

Case 1: CIMB merger with Southern Bank Berhad
Company profile and background
CIMB Group is a leading ASEAN universal bank as it is the largest Asia Pacific (ex-Japan) investment bank and is one of the world's largest Islamic banks. CIMB Group is headquartered in Kuala Lumpur, Malaysia. CIMB offers consumer banking, wholesale banking, Islamic banking and asset management. CIMB is the fifth largest banking group by assets in Southeast Asia and at the end of June 2013 had over 40,000 staff and approximately 13 million customers. The Group's retail banking branch network is the widest in the region, with 1,061 retail branches in Malaysia, Indonesia, Singapore, Thailand and Cambodia. The Group has substantial wholesale banking operations. Its corporate

Synergy is the magic force that allows for enhanced cost efficiencies for the new business, which can be form of revenue enhancement and cost savings. BCHB and SBB were very different in terms of their strength of their product offered, customer segment owned, and channels to reach out to their customer. They are complement with each other in terms of their strength and weak respectively, therefore merger between them will provides the best justification for BCHB to spend the cost for M&A with SBB for an instant inorganic growth rather than a gradual organic growth. CIMB can enhance its consumer banking capabilities and gain further scale and presence. SBB offered strong retail franchise in namely credit cards, auto finance and sub-prime lending as well as business (or SME) lending which complements the latter’s strengths in wholesale banking. SBB provide retail banking with more than 4 million customers across 233 branches and more than RM15 billion of assets across 17 BCs and 33 RBCs. As a merged entity, CIMB Group now ranks as the 2nd largest banking group in Malaysia and 5th largest in South East

CIMB ranked 2nd largest banking group in Malaysia with RM154billion in assets, RM94billion in customer deposits and RM98billion in loans. Besides, CIMB enlarged its branch network with approximately 383 branches nationwide after merger. After merger, CIMB will have a stronger presence in consumer banking for example strong credit card and better business banking, improves risk profile and diversifies earnings stream. In terms of market leadership, CIMB ranked number one investment banking franchise in Malaysia and number one asset manager in Malaysia with total AUM of about RM18 billion. CIMB provide significant market leadership for credit card, sub-prime lending, auto finance, etc. Human capital of CIMB strengthens with larger talent pool and improves work culture mix and dynamism in the consumer bank. In addition, value of CIMB increases and earnings and ROE accretive. Significant cost and revenue synergies also achieved through leveraging on larger customer base with cross selling opportunities (Southern bank merger progress and achievement report,