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* CIMB plans seen highly likely to push Maybank towards a deal
* Maybank expected to wait first to see if CIMB clinches RHB
* Potential domestic targets seen including Public Bank, Alliance
* Maybank may also look at Thailand's TMB - bankers
By Saeed Azhar and Yantoultra Ngui
SINGAPORE/KUALA LUMPUR, July 16 (Reuters) - Investment banks are rushing to court Malayan Banking Bhd (Maybank) with a range of M&A ideas, convinced its archrival's plan to acquire two lenders will push Malaysia's top bank to do a deal of its own.
CIMB Group Holdings' proposal to buy RHB Capital Bhd and Malaysia Building Society Bhd would make it the country's biggest bank by assets and give it an enviable lead in domestic loans.
It comes ahead of a planned partial integration of Southeast Asian economies that is due to begin by the end of next year, with countries in the 10-nation alliance keen to build national champions to bolster their banking systems.
Maybank has expressed interest in RHB in the past, but bankers familiar with its thinking said the lender would wait to see if CIMB can successfully pull off the acquisition before making any M&A moves. If talks fall through, RHB might be back in its sights.
"Their options include thinking about RHB and other domestic targets," said a banker who has discussed M&A scenarios with Maybank officials in the past.
"They don't have to do a deal...but should they do a deal? They will seriously think about it."
Maybank's CEO Abdul Farid bin Alias is also likely to move cautiously since he has had less than one year at the helm of the bank and has no experience integrating two big companies, they added.
"Everybody is pitching but Maybank seemed very relaxed to me," said a Hong Kong-based investment banker who has spoken to Maybank, adding that they were reluctant to run the risk of overpaying for a bank just to retain their No. 1 ranking.
To bolster its position, Maybank is likely to weigh buying a domestic bank such as Public Bank Bhd, the nation's No. 3 lender, or smaller banks such as Alliance Financial Group Bhd and Bank Islam, banking sources and analysts said.
It might also pursue overseas targets such as Thailand's TMB Pcl - a bank that sources say it has expressed interest in before. Bankers declined to be identified as discussions with Maybank were private.
Asked about possible acquisitions, a Maybank spokeswoman declined to comment. Public Bank, Bank Islam and TMB declined to comment. A spokeswoman for Alliance was not available for comment.
Bankers said CIMB would not have announced its plan to buy RHB and Malaysia Building Society without assurances from the major shareholder Employees Provident Fund (EPF), a state pension fund, that chances of a deal were high. Given that, Maybank is unlikely to make a bid for RHB while it is still talking to CIMB, they said.
The EPF owns 41.3 percent of RHB and 65 percent of Malaysia Building Society. It also owns a 14.5 percent stake in CIMB, Thomson Reuters data shows.
CIMB and its two targets have a 90 day exclusivity agreement for talks. Under the deal, CIMB's assets would jump to 614 billion ringgit ($195 billion), topping Maybank's by 6 percent. Rachel Huang, an analyst at AmResearch, estimates CIMB would command 25.5 percent of the domestic loan market, beating Maybank's 17.9 percent.
An enlarged CIMB and Maybank would have similar net profits at 6.9 billion ringgit and 6.5 billion ringgit respectively. But CIMB would have many more branches at 550 outlets versus Maybank's 399, raising the politically sensitive prospect of needing to cut the size of its network and jobs, according to Fitch Ratings.
CIMB, under Nazir Razak - the brother of Malaysian Prime Minister Najib Razak - has been more acquisitive than Maybank over the past 15 years, snapping up a domestic rival, lenders in Indonesia and Thailand and businesses owned by Royal Bank of Scotland. Maybank's biggest acquisition in recent years was its 2008 purchase of Indonesian Bank BII, a deal valued at $2.7 billion.
Public Bank, the nation's No. 3 bank, has been often cited by bankers and analysts as a target for Maybank, offering scale with assets of 312.5 billion ringgit ($98 billion) that are seen as being of sound quality.
But some see Public Bank's size as being tough to swallow.
Pong Teng Siew, head of research at Inter-Pacific Research, tipped Malaysia's seventh-biggest bank Alliance as a possible target. Singapore state investor Temasek Holdings may want to shed its stake in the firm as Malaysia's loan growth slows, he said. Temasek declined to comment.
Bank Islam, the country's biggest stand-alone Islamic finance lender, was also cited by one banker as a potential target because acquiring it would counter moves by CIMB to set up a mega Islamic bank within its financial group. ($1 = 3.1790 Malaysian ringgits) (Additional reporting by Denny Thomas and Michelle Price in Hong Kong and Manunphattr Dhanananphorn in Bangkok; Editing by Edwina Gibbs)