Malaysia's top lender Maybank has denied reports that it was in negotiations with Southern Bank, the country's second-smallest, after intense speculation over its widely-anticipated merger.

"We have not approached both Bank Negara and Southern Bank (SBB)," Maybank president and chief executive Amirsham A Aziz told reporters.

"We are not in any negotiations," he said when asked if Maybank had approached the central bank and Southern Bank on a possible merger talk.

However Amirsham added that Maybank would consider any domestic mergers that make sense and is value enhancing.

The Asian Wall Street Journal , citing unnamed sources, reported Wednesday that Southern Bank was seeking a merger with Maybank, the country's biggest, in a bid to fend off a hostile takeover from predator CIMB.

Hostile bid

CIMB Group, a unit of Malaysia's second-largest financial group Bumiputra-Commerce Holdings Bhd, made a RM$6.35 billion hostile bid Monday for Southern Bank, the country's second smallest by assets, after merger talks broke down last week.

The board of Southern Bank said Tuesday that it had unanimously rejected the CIMB offer because it "fundamentally undervalues" the bank, and that it had begun fresh merger talks with a "major local financial institution."

The AWSJ said that executives from Maybank and SBB senior executives approached the central bank on Monday for permission to begin merger talks but added that a Maybank spokesman declined to confirm this.