Australia and New Zealand Banking Group is near a deal to sell its Malaysian banking stake to a pension fund and exit the Southeast Asian nation, sources familiar with the matter said, in a transaction that could be worth around US$900 million.
ANZ has been pursuing a sale of its 24 percent stake in its Malaysian affiliate AMMB Holdings (AmBank) since early last year as part of a strategy to divest minority stakes in Asia and as AmBank was dragged into a wide-ranging corruption scandal at state fund 1MDB.
In June, RHB Bank and AmBank said they were starting merger talks, in Malaysia's biggest ever banking deal. As part of the all-share deal, valued at about US$9 billion, RHB is looking to acquire AmBank and the two banks are in exclusive talks until the end of August.
ANZ's stake is expected to be roughly 10 percent in the merged entity.
Sources said ANZ is in talks to sell that stake to Malaysian retirement fund KWAP, which already owns small stakes in both RHB and AmBank.
Both firms have "agreed in principle" to the deal at a price equivalent to one-time book value of AmBank, said one of the sources.
"KWAP has always had an aspiration to hold a significant investment in a financial institution. KWAP had considered purchasing part of ANZ's stake two years ago but was not agreeable to the pricing," said the source.
Last week, Malaysia's Star newspaper quoted KWAP CEO Wan Kamaruzaman Wan Ahmad as saying the fund was keen on buying ANZ's stake after the proposed RHB and AmBank merger.
KWAP and AmBank declined to comment. "We will decline to comment on market speculation," an ANZ spokesman said.
ANZ's stake is also drawing interest from another Malaysian institutional investor, said the source.
The sources declined to be identified as the discussions were private.
RHB has indicated to analysts that it would pay AmBank shareholders a one-time multiple of the latter's book value.
ANZ wanted to exit the stake partly after AmBank was dragged into a political scandal linked to state fund 1Malaysia Development Bhd (1MDB) and Prime Minister Najib Abdul Razak, sources have previously said.
In 2015, AmBank was slapped with an RM53.7 million fine by Malaysian regulators for breaching financial regulations.
Najib has been buffeted by allegations of graft, in particular by revelations of the transfer of hundreds of millions of dollars into his AmBank account in 2013.
The prime minister has denied any wrongdoing.
If the RHB-AmBank merger wins the approval of shareholders, the stakes of other key shareholders will also decline in the merged entity. Abu Dhabi's Aabar Investments, with a 17.8 percent stake in RHB, would hold 10.3 percent, according to a note by Maybank Research.
The Abu Dhabi firm, which has been linked to the 1MDB scandal, merged into Mubadala last year. A separate source close to Mubadala said the firm wants to eventually sell Aabar's stake in RHB but will wait until it gets a "fair" price.
Mubadala declined to comment.