The companies had said in June that they were starting merger talks after receiving the Malaysian central bank’s blessing to begin negotiations. RHB had said it would acquire AmBank in an all-stock deal.
A successful takeover of AmBank -- which has a market value of 14.16 billion ringgit ($3.31 billion) -- would reinforce RHB’s ranking as the fourth-largest Malaysian bank by assets behind Maybank (MBBM.KL), CIMB Group Holdings (CIMB.KL) and Public Bank (PUBM.KL). AmBank is the sixth-biggest.
However, deal talks have stumbled over valuation because of contingent liabilities, one of the sources said.
The sources did not want to be named because the talks were confidential.
AmBank declined to comment and said a statement would be issued shortly. RHB did not immediately respond to request for comment.
RHB and AmBank had both requested for that trading in their shares be halted on Tuesday, pending material announcements.
Australia and New Zealand Banking Group (ANZ.AX), a 24 percent shareholder in AmBank, had been looking to divest its stake through the sale, though Malaysian retirement fund KWAP may yet buy the holding. Reuters reported in July that they were in negotiations over a $900 million deal.
Though the Malaysian central bank has been encouraging consolidation of the sector, deals have proved hard to nail down.
RHB, CIMB and Malaysian Building Society (MBSS.KL) started negotiations in 2014 over a $20 billion three-way merger to create Malaysia’s largest bank, but talks collapsed in 2015.
Reporting by Liz Lee; Editing by David Goodman