Hong Leong Bank and EON Bank

Hong Leong Bank and EON Bank-Takeover: Chronology

05/01/2010 EON Capital's Fortunes In The Coming Weeks

Business Times, SINGAPORE, Jan 5 — Doubts are surfacing over a possible merger between Hong Leong Bank and EON Bank that would create Malaysia’s fourth-largest bank with assets of RM110.5 billion.

In late December, Hong Leong Bank, which is controlled by the reclusive tycoon Quek Leng Chan, told the stock exchange that it had received Bank Negara Malaysia’s permission to start negotiations with “certain shareholders” of EON Capital to acquire an interest in its smaller rival.

Listed EON Capital wholly owns EON Bank. EON Capital’s largest shareholders are businessman Rin Kei Mei and Sarawak billionaire Tiong Hiew Khiing, who collectively hold 33.2 per cent of the financial firm. Other shareholders include Hong Kong-based investment fund Primus Pacific Partners (20.2 per cent), the Employees Provident Fund (12.1 per cent) and state investment agency Khazanah Nasional (10 per cent).

The sticking point could be price. Local news reports, citing sources, have said that Quek would be willing to pay between RM5.50 and RM6 per EON Capital share, which would value the bank at one-1.2 times book.

“A previous attempt several years ago stalled over pricing: Mr Quek is not known to pay more than what he considers fair.’

But officials familiar with Rin and Tiong said that they would expect at least RM8-8.20 a share, which would value the bank at almost 1.6 times book. There is no certainty that a deal will be struck, as this is not the first time Hong Leong Bank has eyed EON Capital. A previous attempt several years ago stalled over pricing: Quek is not known to pay more than what he considers fair.

So far, nothing has happened as Quek is said to be abroad. The Star newspaper, citing sources, said yesterday that the Employees Provident Fund and Khazanah are ‘believed’ to have exited from EON Capital. But a government official denied this.

“We haven’t received any offer so far,” he told BT.

It is also not clear where Primus would stand. Three years ago, the investment fund bought into EON Capital for a hefty RM9.55 apiece – a price Quek would probably consider astronomical. And the opposite could be said about Quek’s speculated buying price — RM5.50-6 — as far as Primus is concerned. Indeed, there is talk that Primus is approaching other funds to make a rival bid for EON Capital. According to The Star, the fund approached Singapore’s Temasek Holdings.

In theory, this makes sense. Temasek manages Malaysia’s smallest bank, Alliance, so aligning with Primus could pave the ground for an ultimate merger between EON Bank and Alliance Bank. But the Singapore investment agency has not commented publicly on The Star’s story.

What is clear is that Malaysia’s central bank would encourage a merger. Indeed, the move towards a possible merger reflects Bank Negara’s wish to winnow the Malaysian banking sector to a few large banks, to better withstand increased foreign competition starting this year. Malaysia now has eight local banks. — Business Times Singapore

26/04/2010 EONCap acquisition – no share option

HONG Leong Bank Bhd (5819) has submitted its improved RM5.06 billion all-cash bid for EON Capital Bhd (EONCap) to Bank Negara Malaysia and shareholders of both banks are set to vote on it in May.

At the same time, Hong Leong said it plans to raise up to RM1.6 billion from a renounceable rights issue and RM1.8 billion from the sale of capital qualifying securities.

The submission brings the deal, which would create the country’s fourth biggest banking group, a step closer to completion. However, it did not include a share option that was requested by EONCap.

Hong Kong investment firm Primus Pacific Partners Ltd, EONCap’s single biggest shareholder with 20.2 per cent, has been resisting the takeover.

It paid RM9.55 per share for its stake while Hong Leong’s fresh offer is worth RM7.30 a share. On April 18, Primus said it had no plans to sell its shares although it appears that the deal will happen if enough shareholders say yes.

This is because Hong Leong is proposing to buy EONCap’s entire asset and liabilities, a method that requires the nod of just over 50 per cent of EONCap shareholders.

“We target to have our extraordinary general meeting to seek our shareholders’ approval for the transaction by end of May,” Raymond Choong, president of Hong Leong Financial Group Bhd (HLFG), said in a statement.

“The proposed rights issue, on the other hand, is undertaken to strengthen our capital base after the completion of the acquisition of EONCap assets and liabilities” Choong added.

Hong Leong plans to ask HLFG to subscribe to its portion of the rights issue, which will raise RM1.02 billion for the lender.

Hong Leong’s offer comes with several conditions. Chief among them is that it has to be satisfied after going through the books of EONCap.

If the due diligence reveals any adverse effects on EONCap’s financial position or any contingent liability that amounts to at least RM100 million, Hong Leong will offset its bid price against that sum or it could also choose to drop the deal.

21/05/2010 EON Defies Credit Suisse, Biggest Shareholder on Malaysian Bank Takeover

EON Capital Bhd.’s board will defy opposition from Credit Suisse Group AG and its largest investor by asking shareholders to vote in favor of a sale to Hong Leong Bank Bhd. in what would be Malaysia’s biggest bank takeover in four years.

Hong Leong, controlled by billionaire Quek Leng Chan, has offered 5.06 billion ringgit ($1.5 billion) for the owner of Malaysia’s seventh-biggest bank. Independent adviser Credit Suisse and Ng Wing Fai, an EON director and managing director of 20 percent shareholder Primus Pacific Partners Ltd., oppose the bid, according to a statement from EON today.

EON’s board says shareholders need to consider the impact of increasing competition, tougher capital rules and the entry of foreign banks into Malaysia. The 7.30 ringgit per share offer values the Kuala Lumpur-based company at 1.4 times book value, compared with an average of 1.9 times for Malaysia’s nine listed banks, according to data compiled by Bloomberg.

“There is the possibility of shareholders rejecting the offer in an extraordinary general meeting, thereby forcing Hong Leong Bank to increase its offer price,” RHB Research Institute Sdn. analyst David Chong said in a report today. He maintained his “outperform” rating on the stock.

Hong Leong made a first offer on Jan. 21 at 7.10 ringgit per share, equal to the stock’s closing price that day, and won the backing of EON’s board on April 2 when it raised the bid by 3 percent. The stock closed unchanged at 6.92 ringgit in Kuala Lumpur today.

‘Disagreement’

Ng “expressed his disagreement” and believes the sale “is not in the best interest of the company,” EON said in its statement today. Credit Suisse deemed the offer “not fair from a financial perspective,” according to the statement.

Primus paid 9.55 ringgit a share for its stake in 2008.

Government-owned Khazanah Nasional Bhd., the Employees Provident Fund, and businessmen Rin Kei Mei and Tiong Hiew King, jointly hold more than 50 percent of shares in EON, according to the statement.

For the sale to go through, the board needs acceptances from 50 percent plus 1 share. It has not set a date for a shareholder meeting.

The board said it had also considered the views of its adviser Goldman Sachs (Singapore) Pte, and had taken a “holistic approach” to the offer. Connie Ling, a spokeswoman for Goldman Sachs in Hong Kong, declined to comment on what advice Goldman Sachs had given.

Josephine Lee, a spokeswoman for Credit Suisse in Hong Kong, declined to comment.

‘Offer is Low’

A takeover of EON would help Quek create the Southeast Asian nation’s fourth-biggest banking group with assets of about 121 billion ringgit.

“Our view remains that Hong Leong Bank’s offer is low at 1.42 times book, without incorporating a sufficient takeover premium for the takeover of a business in its entirety,” Wong Chew Hann, an analyst with Maybank Investment Bank Bhd., wrote in a report today. Maybank retained a “hold” rating and 7.20 ringgit forecast for the stock.

The bid comes as Malaysia accelerates efforts to open the financial industry. Industrial & Commercial Bank of China Ltd. on April 28 started operations in Malaysia after the government granted it the first permit to a foreign lender in nine years.

Malaysia plans to award as many as nine new financial- services licenses this year to overseas companies, Prime Minister Najib Razak said in April 2009.

21/05/2010 EONCap board approved submission offer to shareholders

The Board of EONCAP (via MIMB) has approved (with the exception of Primus’s CEO) to forward Hong Leong Bank’s asset and liabilities purchase offer to shareholders via an EGM which will be announced at a later date.

The Board of EONCAP has also proposed to distribute the full sales proceed via special dividend and capital repayment to shareholders once the sales has been concluded. The expected date for the full distribution is by end 2010.

25/05/2010 EONCap to issue notice to shareholders

The board of EON Capital Bhd (EON Cap) is expected to send out to shareholders its EGM notice and circular on the RM5.06bil takeover offer from Hong Leong Bank Bhd (HLB) this week.

It is understood that the banking group held a board meeting yesterday to discuss what would be written in the circular after it had decided to go ahead and table the proposed offer to shareholders despite facing resistance from its independent financial adviser (IFA), Credit Suisse Securities (M) Sdn Bhd, who has said the proposal was “not fair from a financial perspective.”

HLB values EON Cap at 1.42 times book.

A source familiar with the matter said the notice and circular could be send out earliest by tomorrow, with the board meeting for this purpose yesterday.

“The challenge is in the wording used in the circular as it must be convincing enough in light of the IFA’s opinion and because it must include the views of the party which objects,” the source said.

On Friday, EON Cap said it would recommend to shareholders to accept the RM5.06bil, which works out to RM7.30 per share, takeover offer from HLB to shareholders at an upcoming EGM despite the disapproval of its IFA as it was “in the best interests” of the financial group.

Director Ng Wing Fai, who represents EON Cap’s largest shareholder, Primus Pacific Partners Ltd, with its 20.2% stake, expressed his disagreement in the statement, saying that the proposed disposal was not in the best interests of the company.

Primus bought its shares at RM9.55 each in February 2008 and accepting HLB’s offer would crystalise its losses.

Ng’s views would be included in a circular to be sent to shareholders, EON Cap had said.

After the circular is sent out, the EGM should be held within 14 days.

In the interim, it’s business as usual for the banking group.

“Now that the offer will be tabled, we’ll just have to wait and see what happens. In the meantime, management is driving business as usual,” EON Bank group chief executive officer Michael Lor told StarBiz yesterday without elaborating.

EON Bank is EON Cap’s main asset.

Analysts said the bank on Friday reported results above estimates, with net profit for the first quarter ended March 31 at RM97.8mil, 23% higher compared with a year ago, boosted by savings on operating expenses that totalled RM36.1mil.

However, most houses did not make changes to their calls on the company’s stock following the release of the results.

“EON Cap achieved loans growth of 2.4% quarter-on-quarter, translating to annualised loan growth of 9.5% year-on-year marginally below our estimated 10.8% for FY10,” AmResearch said in a note yesterday.

The proposed takeover of EON Cap by HLB has been ongoing since the beginning of the year when HLB first made a RM4.92bil offer for EON Cap’s assets and liabilites. It was consequently rejected by the board for being “too low.”

The offer was then improved to the current one.

EON Cap’s major shareholders Rin Kei Mei, Tan Sri Tiong Hiew King and Khazanah Nasional Bhd remained committed to disposing of their stakes in EON Cap, analysts said.

The three have a combined 41.7% stake in EON Cap, which implies they would only require the support of the Employees Provident Fund (EPF), with an 11.8% interest, for the deal to succeed as the asset-liability mode of acquisition requires a 50% plus one vote from shareholders.

The EPF had been reported to have said that it would not abstain from voting at the upcoming EGM.21/06/2010 Malaysia EON Capital delays EGM on Hong Leong merger

KUALA LUMPUR, June 22 (Reuters) - Malaysian lender EON Capital EONP.KL will delay an extraordinary general meeting to vote on a merger with Hong Leong Bank (HLBB.KL) after a key shareholder filed a lawsuit to block the deal, an EON Capital source said.

The delay comes after Hong Kong-based private equity fund Primus Pacific Partners, EON Capital's biggest single shareholder with a 20 percent stake, said on Monday it had filed a lawsuit alleging the 5.1 billion ringgit ($1.60 billion) offer that would create Malaysia's sixth biggest lender, was unlawful.

"The EGM date will not be announced today, it will be announced at a later date," a source, who asked not to be named because he is not authorised to comment, said on Tuesday.

EON Capital had been expected to announce the date of the EGM on Tuesday.

EON Capital said late on Monday that it would seek legal advice over the suit. The firm declined to comment on Tuesday but will hold its annual general meeting on Tuesday where it is expected to address the issue.

The delay may put the deal in jeopardy after Hong Leong said late on Monday that it may walk away from the deal if it does not have shareholder approval by August 15.

Hong Leong first attempted to buy out EON Capital in January when it offered 4.92 billion ringgit but EON Capital's board rejected the offer because it considered it too low.

Hong Leong launched a second offer after EON Capital appointed new board members and Primus said the new board members acted in the interest of some shareholders against the interest of others.

In 2008, Primus paid 9.55 ringgit per EON Capital share for its 20 percent stake, well above the 7.30 ringgit Hong Leong is currently offering. ($1=3.186 Malaysian Ringgit)

07/07/2010 EONCap Saga continues : Proceed with EG M

Eon Capital’s directors, except for Ng Wing Fai, plan to ask shareholders at an EGM to empower the board to make a final decision on whether or not to accept the deal.

Eon Capital Bhd (EONCap) (5266) has decided to go ahead and table to its shareholders a RM5.06 billion takeover offer from Hong Leong Bank Bhd despite an ongoing lawsuit over the matter.

Its directors, with the exception of Ng Wing Fai who represents the single largest shareholder Primus Pacific Partners, plan to ask shareholders at an extraordinary general meeting (EGM) to empower the board to make a final decision on whether or not to accept the deal.

It said the board would only make the decision if shareholders gave the go-ahead for the deal at the EGM, and after it gets the approval of the Minister of Finance.

More importantly, the board’s decision is subject to a final decision by the Kuala Lumpur High Court on the lawsuit filed by Primus last month, it said in a stock exchange filing late yesterday.

“This means, after getting all the approvals, the transaction will only go through if the court deems it lawful,” a source familiar with the matter said.

Primus claims the Hong Leong deal is unlawful in the way it is structured and wants EONCap’s directors to pay the bank damages of RM1.1 billion if the takeover bid goes through at an EGM.

On Tuesday, it also threatened to start contempt proceedings against the directors should the bank go ahead with the EGM.

But by saying it would wait for the court’s decision, EONCap seems to have found a way around potentially being sued for contempt, a banking analyst observed.

However, there are still concerns as to whether Hong Leong will decide to stay on with the deal given that the court matter could drag on.

The case will go to trial only from September 20 whereas Hong Leong has said it may walk away if all approvals for the deal are not secured by August 15.

Hong Leong has yet to indicate if it will extend its offer beyond that date.

Meanwhile, EONCap said that it would convene the EGM in “due course”.

A source said it may take one to two weeks before the group is able to issue a circular on the matter to shareholders.

It is possible an EGM may take place in mid- to late August.

Primus is against Hong Leong’s offer of RM7.30 a share as this is much lower than its entry cost of RM9.55 a share in 2007. It thinks a fair price should be at least RM8.91.

EONCap’s share price closed at RM6.89 yesterday.28/07/2010 EONCap sequel: EGM on 19 August

The board of EON Capital Bhd, owner of Malaysia’s seventh largest bank, will ask shareholders to vote on Hong Leong Bank Bhd’s RM5.06bil (US$1.6bil) takeover offer on Aug 19, according to a statement sent to Bursa Malaysia yesterday.

The move defies EON Cap’s biggest investor which has threatened to seek RM1.11bil in damages if the deal goes through at the current price.

Shareholders are divided over whether to accept an all-cash offer of RM7.30 a share from billionaire Tan Sri Quek Leng Chan’s Hong Leong Bank (HLB).

Primus Pacific Partners Ltd, a Hong Kong-based investment fund, is EON Cap’s biggest shareholder and opposes the deal, having paid RM9.55 a share for its 20% stake in 2008. That’s 31% more, or a difference of RM315mil, based on Bloomberg calculations.

Primus, which has one seat on EON Cap’s board, said it filed a lawsuit against its nine other directors on June 21, claiming they handled HLB’s bid improperly.

The High Court has fixed trial dates from Sept 20 to 28, more than a month after HLB’s offer is scheduled to lapse on Aug 15.

EON Cap rose 0.14% to close at RM6.94 yesterday. The FTSE Bursa Malaysia KLCI rose 0.03%.

HLB was unchanged at RM8.86.

An EON Cap takeover would help Quek create Malaysia’s fourth biggest banking group with assets of about RM121bil.

For the sale to go through, the board needs acceptances from 50% plus 1 share.

Government-owned Khazanah Nasional Bhd, the Employees Provident Fund, businessmen Rin Kei Mei and Tiong Hiew King jointly hold more than 50% of the shares, according to an EON Cap statement on May 21.

HLB’s offer was also dependent on the result of the Primus lawsuit and approval from the Finance Minister, EON said on July 7.20/09/2010 Primus Sues EON Directors to Prevent Takeover of EON Capital, SCMP Says

Primus Pacific Partners, a Hong Kong-based private equity company, is suing nine directors of EON Capital Bhd., a Malaysian lender in which Primus owns 20 percent, to prevent the planned takeover of the bank, the South China Morning Post reported, citing court documents.

The proposed sale to Hong Leong Bank Bhd. undervalues EON, Primus plans to say in a trial that starts in Kuala Lumpur today, according to court documents, the report said.

28/09/2010 EONCap Shareholders say Yes for sale of EON Bank

EON Capital Bhd (EONCap) has received 97% of the voting shares at the EGM called to consider the proposed acquisition of the group by Hong Leong Bank Bhd for RM5.06bil cash, says chairman Gooi Hoe Soon.

“The proposed disposal was carried with 97% voting for the resolution and 3% against it,” he told reporters yesterday after the group’s EGM.

Gooi said shareholders representing 436 million shares or 63% of EONCap’s total share capital attended the EGM and voted on the resolutions.

Gooi Hoe Soon said shareholders representing 63% of total share capital attended the meeting.

He also said representatives of Primus (M) Sdn Bhd, the single largest stakeholder of EONCap which holds 20% of the group, had walked out of the EGM before the voting started.

Primus is currently fighting a case in court to stop the proposed acquisition by Hong Leong Bank, citing that it was not lawful and not in the best interests of the group.

When asked to comment on that matter, Gooi declined to say anything as it was now with the High Court.

The hearing for the case continues for the rest of this week and from Oct 20 to 22.

Gooi also said the second resolution for a special dividend received the approval of 97.23% or 424.836 million shares while 2.77% or 12.088 million shares were against.

The group told Bursa Malaysia yesterday that as set out in ordinary resolution 1 on the proposed disposal, which had been passed by the shareholders of the company at the EGM held on Sept 27, the board of EONCap had been duly empowered by the shareholders of the company to decide, at its sole discretion, whether or not to accept Hong Leong Bank’s offer, subject to the final decision of the High Court of Malaya in relation to the petition filed by Primus on June 21, being obtained.

Accordingly, it said the decision of the board on the acceptance of the offer would only be made and announced at a later date after the final decision of the High Court on the petition had been obtained.

“Please note that to-date, the court hearing for the petition is still on-going,” it said.

Meanwhile, EONCap’s wholly-owned subsidiary EON Bank Bhd has received a writ of summons in relation to a claim by the plaintiff Karunanithy a/l Neelakandan for inter alia damages amounting in aggregate to RM21.8mil.

In a filing with Bursa Malaysia, EONCap said the claim was for an alleged malicious prosecution of the plaintiff by EON Bank.

“The summons-in-chambers was heard on Sept 24 and the judge has fixed Oct 21 for mention for the parties to file all necessary affidavits,” it said.

It said the company was of the view that the said claim was not expected to result in any material and adverse impact on the operations, business and financial position of EON Bank and EONCap.

“In any event, EON Bank has engaged legal counsel to resist the application and to defend the legal suit,” it added.03/02/2011 EON Bank Can Stand Alone, With Or Without Merger Offer, Says CEO

KUALA LUMPUR, Feb 3 (Bernama) -- EON Bank can stand alone with or without merger or acquisition offers, says Group Chief Executive Officer Michael Lor. "We are in a strong position today to grow, (regardless of) whether there are offers or not. "As far as the management is concerned, it is business as usual for us," he said after unveiling EON Bank Group's wealth management campaign for 2010. Lor said the bank performance indicators improved steadily over the last 12 months as a result of its transformation programme, aggressive promotions and marketing strategy. Over the last 12 months, he said, the bank's credit card segment grew in excess of 20 per cent, hire purchase by three per cent, loan loss coverage rose to 86 per cent from 56 per cent and gross non-performing loans improved to two per cent from four per cent. "Based on these growth numbers, the value of the company has significantly appreciated. That's why the board has taken the stand that the Hong Leong Bank offer has significantly undervalued the EON Group," he said. Last month, EON Capital Bhd, the holding company of EON Bank Group, received Bank Negara's approval to start merger talks with Hong Leong Bank Bhd. If the merger had materialised, EON Bank Group would be the fourth largest bank in the country behind Maybank, CIMB and Public Bank. Hong Leong Bank Bhd had offered to acquire the entire assets and liabilities of EON Capital for RM4.9 billion cash or RM7.10 per EON Cap share. Hong Leong Bank obtained approval to enter into talks with EON Capital's two major shareholders -- businessman Rin Kei Mei and Sarawak billionaire Tan Sri Tiong Hiew King.

Both owned a combined indirect stake of 31.7 per cent held via Kualapura Sdn Bhd and Lintang Emas Sdn Bhd with 15.4 per cent and RH Development Sdn Bhd with 16.3 per cent. Khazanah Nasional Bhd, the government's investment arm, with 10 per cent stake, had agreed to sell is equity to Hong Leong Bank Bhd. The Employees Provident Fund (EPF) was also prepared to sell its 10.7 per cent stake. Other shareholders of EON Capital include Hong Kong-based Private Equity Fund Primus Pacific Partners which held 20.2 per cent stake. EONCap is the holding company of EON Bank, which has a network of 140 branches, while Hong Leong Bank is the country's sixth largest lender, with 199 branches and sales centres. It was reported earlier the combined assets of Hong Leong Bank and EON Capital worth RM121.41 billion would enable the grouping to overtake assets of the country's fourth biggest lender, RHB Capital Bhd, which stood at RM110.5 billion. -- BERNAMA

24/02/2011 EON Bank Chief Executive Michael Lor Quits Amid Takeover Tussle

Michael Lor, chief executive officer of EON Bank Bhd., has quit the Malaysian lender whose parent is the target of a 5.06 billion-ringgit ($1.7 billion) takeover, according to a stock exchange filing today.

His resignation was accepted and will take immediate effect, EON Capital Bhd., owner of the bank, said in a statement. Lor, 46, couldn’t be immediately reached for comment at his office or by mobile phone when contacted by Bloomberg News today.

EON Capital is the subject of a planned buyout by billionaire Quek Leng Chan’s Hong Leong Bank Bhd. Shareholders voted in favor of the sale last September, although completion is pending lawsuits filed by Primus Pacific Partners Ltd., a Hong Kong-based investment fund with a 20.2 percent stake, which is seeking to block the sale.

Lor joined EON Bank as head of group consumer banking in 2008 before being appointed chief executive in October 2009. He told Bloomberg in an interview in February 2010 that EON was in no hurry to be sold or find a merger partner as the bank was “very well capitalized.”

An EON takeover would help Hong Leong create the Southeast Asian nation’s fourth-biggest banking group with combined assets of about 121 billion ringgit.

Mohzani Abdul Wahab and Zaha Rina Zahari, two of the bank’s directors, will take on Lor’s responsibilities while the search for a successor takes place, EON said. They will be assisted by Peter Chow Ying Choon, the statement said.

26/04/2011 China Construction Bank Said to Express Interest in Buying Malaysia’s EON

China Construction Bank Corp. (939), the world’s second-largest lender by market value, has expressed interest in buying Malaysia’s EON Capital Bhd. (EON), two people with knowledge of the matter said.

The Beijing-based bank sent a letter to Malaysia’s central bank asking for permission to start talks with some or all of the major shareholders of EON Capital, the people said, asking not to be identified because discussions are private. A bid by Construction Bank would rival an existing 5.06 billion ringgit ($1.7 billion) offer from Malaysian billionaire Quek Leng Chen’s Hong Leong Bank Bhd. (HLBK), which has been approved by minority shareholders and local authorities.

Construction Bank plans to make a “substantial investment” in Malaysia and aims to provide a wide range of banking services to businesses to support their investments and funding needs in China, according to the April 11 letter, which was obtained by Bloomberg News. Yu Baoyue, a press officer at the lender, declined to comment.

Primus Pacific Partners Ltd., EON’s biggest shareholder, and Construction Bank have held initial discussions on the matter though no formal talks have started, the people said. Should the negotiations proceed, Construction Bank is prepared to make an offer higher than EON Capital’s current market capitalization of $1.64 billion, they said.

Photographer: Goh Seng Chong/BloombergA pedestrian walks past the headquarters of EON Bank Bhd., a subsidiary of EON Capital... Read MoreReuters reported on the letter yesterday, citing an unidentified person.

Overseas Push

An acquisition would be Construction Bank’s first purchase outside mainland China since it bought a Hong Kong unit of American International Group Inc. (AIG) for $70 million in November 2009. Larger rival Industrial & Commercial Bank of China (1398) Ltd., which also aims to bolster overseas operations, earlier this year agreed to buy a U.S. retail bank.

EON Capital “is not aware of this matter and is not in a position to comment on any speculation,” the lender said in an e-mailed statement to Bloomberg News today. Bank Negara Malaysia, the country’s central bank, said in a statement to Bloomberg that as a matter of policy it doesn’t comment on individual institutions. A spokeswoman for Primus, who declined to be identified, had no comment.

Shares of Construction Bank fell 0.3 percent to HK$7.46 at 3:16 p.m. in Hong Kong. EON Capital’s shares rose 0.9 percent to 7.13 ringgit, while Hong Leong’s fell 1.4 percent to 10.26 ringgit, set for their lowest close in almost three weeks.

Construction Bank hopes to “secure the highest possible equity ownership” in EON Capital should the central bank approve its application to undertake the takeover discussions, the letter said.

Court Ruling

Malaysia limits foreign ownership of commercial banks to a maximum 30 percent.

Industrial & Commercial Bank of China Ltd. (601988), the world’s biggest lender by market capitalization, started its own commercial banking operations in the commodities-rich country in April last year after winning a commercial banking license following a visit by Chinese President Hu Jintao in 2009. The Beijing-based lender was the first overseas lender to get a permit since Bank of China Ltd. nine years ago.

Chinese Premier Wen Jiabao will visit for two days from tomorrow when the two countries are expected to sign further agreements aimed at boosting trade and investment.

‘Remote’ Chance

“We believe the possibility of China Construction bank acquiring a strategic stake in EON Capital is remote,” Rachel Huang, an analyst at AmResearch Sdn. wrote in a report today. “Both EON Capital and Hong Leong Bank had received approvals from both Bank Negara Malaysia and the Ministry of Finance in July 2010 for their proposed merger.”

Primus, which owns 20.2 percent of the Kuala Lumpur-based lender, has sued EON and nine of its directors and sought 1.11 billion ringgit in damages if the lender proceeds with the planned takeover by Hong Leong. A judge is scheduled to deliver his verdict in the case in Penang, Malaysia, on April 28.

The Hong Kong-based investment fund opposes the deal having paid 9.55 ringgit a share for its stake in 2008. That’s 31 percent more than Hong Leong’s all-cash offer of 7.30 ringgit per share, or a total difference of 315 million ringgit, based on data compiled by Bloomberg.

A Malaysian court in January ruled that a vote by EON Capital’s shareholders in favor of Hong Leong’s bid was valid, thwarting efforts Primus to block the sale.

29/04/2011 EON Accepts Hong Leong Bank’s Sweetened Acquisition Offer, Plans Dividend

EON Capital Bhd. (EON) accepted Hong Leong Bank Bhd. (HLBK)’s 5.06 billion ringgit ($1.7 billion) takeover offer for the Malaysian bank after the bid was sweetened with a dividend payment to existing EON shareholders.

EON accepted the bid on condition Hong Leong had no objections to a 311.9 million ringgit dividend payout, it said in a statement today. Hong Leong said in a separate statement that it’s “agreeable” to EON’s proposal. The companies’ shares were suspended on the Kuala Lumpur stock exchange today.

The move comes a day after a Malaysian court ruled that the planned acquisition by billionaire Quek Leng Chan’s Hong Leong is legal, thwarting an attempt by EON’s biggest shareholder Primus Pacific Partners Ltd. to block the sale. An EON takeover would

help Hong Leong, Malaysia’s sixth-largest bank, create the Southeast Asian nation’s fourth-biggest banking group by assets.

Primus, a Hong Kong-based investment fund that owned a 20.2 percent stake in EON, had opposed the takeover offer after paying 9.55 ringgit a share for its interest in 2008. That’s 31 percent more than Hong Leong’s all-cash offer, which equals 7.30 ringgit a share.

EON’s board met last night to approve a dividend payment of about 40 sen a share after obtaining Hong Leong’s agreement following several rounds of negotiations, said a person familiar with the matter who asked not to be identified because the process is private.

‘Buying Time’

EON’s minority shareholders voted in favor of the takeover at a meeting last year. Primus then sued the bank and nine of its directors, claiming they had exceeded their powers and breached fiduciary and statutory duties in allowing the sale vote to proceed. In the suit filed through its local unit in June, the fund sought 1.11 billion ringgit in damages if the transaction went ahead at the current offer price.

“The petitioner’s motive is purely to buy time in order to secure another bidder who’d pay more than 7.30 ringgit per share,” Judicial Commissioner Varghese George Varughese said when delivering his judgment in a high court in Malaysia’s northern Penang state. “Corporate democracy must prevail.”

China Construction Bank Corp. (939), the world’s second-largest lender by market value, expressed interest this month in buying EON, two people with knowledge of the matter said on April 26.

The Beijing-based bank sent a letter to Malaysia’s central bank asking for permission to start talks with some or all of the major shareholders of EON, hoping to secure the highest possible equity ownership in the Malaysian lender, according to the people who asked not to be identified as the information was confidential.

03/05/2011 EON Capital said Yes to Hong Leong takeover

ON Capital Bhd (EONCap) has accepted a RM5.06 billion takeover offer from its larger rival Hong Leong Bank Bhd, a move that will create the country’s fourth largest banking group by assets.

It did this on Thursday, after the High Court dismissed a lawsuit taken by EONCap’s largest shareholder, Hong Kong-based Primus Pacific Partners, to prevent the takeover.

“The board of directors … signed and delivered their acceptance of the offer,” EONCap told Bursa Malaysia yesterday.

It also said Hong Leong had agreed to its last-minute request to let EON Bank Bhd, its wholly-owned banking unit, pay out a net interim dividend amounting to RM311.9 million.

The dividend, which works out to 45 sen a share, will not be deducted from Hong Leong’s offer price of RM7.30 a share for EONCap’s assets and liabilities. It will also not form part of the assets to be taken up by Hong Leong.

While EONCap has not explicitly said what it intends to do with the dividend it receives from EON Bank, analysts expect it to eventually pay it out to all its shareholders.

This would indirectly raise the offer price for EONCap to RM7.75 a share.

“The additional 45 sen a share sweetens the deal somewhat for shareholders, especially minorities, after waiting so long for it to be concluded,” said Lim Sue Lin, a banking analyst at HwangDBS Vickers Research.

EONCap chairman Gooi Hoe Soon said the dividend was secured after much negotiation with Hong Leong. “We’re pleased with the result,” he said, adding that the directors intended to manage the transaction in a “fair and equitable” manner to all parties concerned.

The proposed dividend is still subject to Bank Negara Malaysia’s (BNM) approval. EONCap will also be making an application to the Securities Commission (SC) for a proposed change in control of its investment bank, MIMB Investment Bank Bhd.

“The parties shall complete the transaction” once the BNM and SC approvals have been obtained, EONCap said.

It remains to be seen whether Primus, a private equity firm, will make any further moves to block the deal. Its lawyers have said they intend to file an appeal against the court’s decision.

“It is only after the court rules on the appeal can the deal come to completion. The interim dividend is positive as it is not excessive and yet is sufficient to increase the probability of bringing the merger to a close,” OSK Research said in a note to clients yesterday.

Primus, who objected to the deal on grounds that the RM7.30 a share offer was too low and not in the company’s best interest, stands to make a loss on its investment if it goes through. The offer is 31 per cent lower than the RM9.55 a share it paid for its

20.2 per cent stake in 2008.

Analysts nevertheless expect the deal to go through. “With the approval from the board, we now expect the takeover to proceed,” said one from AmResearch Sdn Bhd.

The takeover has turned out to be a long-drawn affair, at over a year, the longest ever in the Malaysian banking sector. Hong Leong first showed formal interest in EONCap in December 2009. It made its current offer in April last year, improving on an earlier RM4.9 billion deal.

Shares of Hong Leong and EONCap were suspended from trading in the stock market yesterday to allow for them to make their announcements on the deal. They were last traded at RM10.40 and RM7.23, respectively.

OSK said it expects EONCap’s share price to trade upwards to just under RM7.75 to reflect the dividend. HwangDBS’ Lim said shareholders should use the takeover proceeds to re-invest in Hong Leong to ride on the upside of the enlarged entity, which will now have assets of over RM140 billion. She has a “buy” call on Hong Leong’s stock, with a target price of RM11.80.

06/05/2011 Hong Leong takeover of EON Bank is unconditional

The takeover of EON Capital Bhd (EON Cap) by Hong Leong Bank Bhd has become unconditional as Bank Negara has approved EON Bank Bhd’s interim dividend .

EON Cap in its filing to Bursa Malaysia yesterday said the central bank has given its approval for EON Bank to declare and pay a net interim dividend amounting to RM312mil to EON Cap.

“As such, the offer has become unconditional and it is now pending completion. Any further developments relating to the offer will be announced in due course,” it said.

This dividend payment would indirectly raised the offer price from Hong Leong to RM7.75 per share from RM7.30 per share previously.

Meanwhile, Hong Leong in separate filing said it had completed its issuances of Tier 2 subordinated debt (sub debt) of RM1bil and non-innovative Tier 1 stapled securities (NIT-1 stapled securities) of RM1.4bil respectively yesterday.

The sub debt is rated AA2 while the NIT-1 stapled securities is rated AA3 by RAM Rating Services Bhd.

Hong Leong group managing director Yvonne Chia was pleased with the results and the efforts by the joint lead managers.

“The success of the transaction is also a reflection of investors’ confidence in Hong Leong Bank, and its positive outlook going forward,” she said.

06/05/2011 EON Bank Group is now part of Hong Leong Bank Group

A stronger banking group with assets of more than RM 140 billion An even more comprehensive portfolio of products and services to serve the community Expanded reach and distribution network for customer's convenience with more than 300 branches and 1200 self-

service terminals Focus on people and customers, and on making the merger and integration seamless Kuala Lumpur, (6 May 2011) - Hong Leong Bank Bhd ("HLBB") today announced the completion of the acquisition of

EON Capital Bhd's assets and liabilities. EON Bank group (EON Bank Bhd, EONCAP Islamic Bank Bhd and MIMB Investment Bank Bhd) now becomes part of Hong Leong Bank group ("Group").

"This merger is about value creation for all stakeholders. It creates a systemically stronger banking group with an asset size of more than RM 140 billion to achieve the vision and objectives under Bank Negara Malaysia's Financial Sector Master Plan. As a larger bank, we are also better positioned to support Malaysia's economic growth and transformation.

Customers will now have greater access to an even more comprehensive suite of products and services to serve their needs. We will be able to reach our community better with an expanded distribution network of more than 300 branches and 1200 self-service terminals.

This is also an exciting proposition to all employees of the Group to become part of a larger franchise with regional ambitions, that supports personal development and rewards success, " shared Ms Yvonne Chia, Group Managing Director/Chief Executive, HLBB.

Working towards a seamless experience for customers

"We are committed to make this integration as seamless as possible for our customers and community. It is business-as-usual in the meantime. An integration team from both banking groups will be formed immediately. We will work hard and smart towards a seamless merger for our customers.

As in all normal bank mergers, the process of harmonising the businesses requires time. Merger success comes from a supportive community, understanding customers, a strong leadership, a committed and passionate team, and rigorous

execution of detailed plans," explained Ms Chia.

"We are committed to make this integration as seamless as possible for everyone. It is business-as-usual in the meantime.

In the interim, customers who bank at Hong Leong Bank branches may continue their account and banking enquiries at their respective Hong Leong Bank branches or call Hong Leong Bank Call Centre at +603 7626 8899 until further notice. Similarly, EON Bank group customers may also continue to refer to their own EON Bank group branches or call EON Bank Call Centre at +603 2616 1133. We will be sharing more information and updates of the integration as we progress."

"It is understandable that like any other merger, employees may have concerns and questions about what is happening. Rest assured that employee welfare and interests have been and will continue to be a priority for the Group," continued Ms. Chia.

Business prospects

"We are obviously very excited. We see many opportunities to create value - how we may contribute to the banking sector as a stronger institution, how we may create even more value for customers in how we serve and reach them, how we may provide greater opportunities and careers for our employees, and how we may create more value for the economy and investors.

There will be challenges of course. But overall and on balance, I believe we are in a position of strength to make this merger work. Over the next few months, I will be sharing what those plans are and how we will accomplish them," Ms Chia concluded.

09/05/2011 Hong Leong completes EON Bank merger

Hong Leong Bank Bhd has completed its RM5.06 billion purchase of smaller rival EON Capital Bhd (EONCap), making the enlarged entity the country’s fourth largest banking group. The move marks the end of a 15-month closely-watched takeover battle, the longest ever in the Malaysian banking sector.

“After 15 months of hard work and delays, the union of these two banks has finally become a reality,” a jubilant Hong Leong group managing director, Yvonne Chia, said at a hastily-called press conference last night to announce the completion of the deal.

Also present at the 8pm conference in Wisma Hong Leong was EON Bank Bhd’s head of group business and investment banking, Peter Chow, and the management team of both banking groups.

Chia assured that it would be business-as-usual at both banks while the integration process takes place. An integration committee will be formed immediately, she said. The merged group will have an asset size of over RM140 billion and a distribution network of over 300 branches and 1,200 self-service terminals.

Chia said the group will be looking to grow further in the region.

“The theme for us is growth. (The merger) gives me more confidence to do mergers and acquisitions (M&A),” she said, adding that the group would remain open-eyed for M&A opportunities in the region.

On whether there would be layoffs now that the staff strength has been boosted to close to 12,000, Chia said there would be ample employment opportunities for both sides, given the current shortage in banking talent.

Asked if EONCap shareholder Primus (Malaysia) Sdn Bhd’s court appeal against the takeover could upset the transaction, she stressed that the deal had already been legally completed.

“We’ve paid out (the funds) and the transaction is completed,” she remarked.

Primus is a unit of Hong Kong-based private equity firm Primus Pacific Partners (PPP), which had been against the takeover as it stands to make a loss from Hong Leong’s RM7.30-a-share offer for the smaller bank’s assets and liabilities.

PPP had bought its 20.2 per cent stake in EONCap at a much higher price of RM9.55 a share in 2008. Primus’ appeal has been fixed for case management on May 31.

Meanwhile, EONCap said in a stock exchange filing that it intends to distribute the sale proceeds as well as a RM311.9 million dividend payout from EON Bank back to shareholders. Until the money is paid out, it will be kept with financial institutions to earn interest income. EONCap is to be delisted from the stock exchange in due course.

EONCap’s share price gained 5 sen to RM7.40 yesterday, while Hong Leong’s rose 4 sen to RM10.44. - See more at: http://protradeshares.com/business-news/1299/hong-leong-completes-eon-bank-merger#sthash.i25jceYg.dpuf

09/05/2011 Hong Leong Bank post higher fourth quarter

Hong Leong Bank Bhd earnings rose 31.9% to RM394.57mil in the fourth quarter ended June 30, 2012 from RM299.12mil a year ago and proposed to rewards shareholders with a final dividend of 27 sen per share.

It announced on Tuesday that it increased 17.0% over the corresponding quarter last year using FY11 pro forma basis.

The banking group’s revenue increased by 16.3% to RM965.93mil from RM830.04mil a year ago. Its earnings per share were 23.75 sen from 20.59 sen.

Hong Leong Bank said for FY end June 2012, its earnings rose 44.9% to RM1.648bil from RM1.137bil or an increase of 7.5% over the previous year on pro forma consolidated accounts year-on-year. Its revenue increased by 52.6% to RM3.893bil from RM2.551bil.

Hong Leong Bank group managing director/ chief executive, Datuk Yvonne Chia said the positive results achieved in FY June 2012 – where net profit rose by 7.5% to RM1.648bil from the previous financial year using the pro forma basis — reflected the combined strength of the merged bank.

“We achieved satisfactory performance on our key shareholder value indicators as well. Basic earnings per share rose to 99 sen, against 78 sen last year. Net assets per share rose to RM6.52 from RM5.14 last year, while the return on equity improved to 17.5% from 16.3% in the previous year,” she said. “Exactly one year after the merger, we completed the last mile of our integration journey with the successful delivery of the Single Platform Day 1 (SPD1). We will remain focused on delivering the Hong Leong Bank promise of embedment in the communities we serve to meet the needs of individual and business customers.”

17/06/2011 Entire Business of EON Bank Berhad Transferred to Hong Leong Bank Effective 1 July 2011

Kuala Lumpur, 17 June 2011 - Hong Leong Bank Berhad ("HLBB") wishes to announce that the High Court had today 17 June 2011, granted a Vesting Order transferring the entire business including all assets and liabilities of EON Bank Berhad to HLBB with effect from 1 July 2011. Following the vesting, EON Bank Berhad will become a dormant company.

"The granting of the Vesting Order is a key step towards merging the operating businesses of both banks. While it is effective from 1 July 2011, it will continue to be business-as-usual for customers and business associates of both banks until further notice. Uninterrupted service and seamless continuity of our banking operations at both banks will continue.

Like all bank mergers, the full integration process will take time before we can truly operate on a single platform. The merger is making solid progress at this stage, and we have forged very good camaraderie between the two banks in a very short time. These are exciting times for all of us and the new senior leadership team is focused, passionate and committed to the success of this merger. This is a growth merger for all stakeholders," commented Ms. Yvonne Chia, Group Managing Director / Chief Executive.

21/06/2011 Nearing the end for EON Capital Berhad

EON Capital Bhd (EONCap) will be delisted from the Main Market of Bursa Malaysia by early October 2011, director Nicholas Lough said.

The delisting follows the disposal of EONCap’s entire assets and liabilities to Hong Leong Bank Bhd (HLBB).

“Our businesses will be concluded by end of the year and we expect (EONCap) to be delisted by end of the third quarter or early fourth quarter,” he told reporters after its annual general meeting yesterday.

HLBB took over EONCap in a RM5.06 billion deal, paving the way for the former to become the fourth largest banking group in the country.

As part of the deal, EONCap will pay a special tax-exempt dividend of RM5.16 per share today to shareholders, totalling RM312 million.

EONCap chairman Goon Hoe Soon said the interim dividend was a bonus to its shareholders and “it was heartening for us to complete the HLBB offer and acquisition on a high note by delivering improved value to all shareholders”.

As for the balance cash proceeds of RM1.79 billion from the disposal to HLBB, Gooi said this will be distributed back to entitled shareholders via a non-taxable capital repayment which is now pending a High Court confirmation on July 18.

He said the capital repayment was approved by shareholders at last year’s extraordinary general meeting and is expected to be completed by the end of this year.

Gooi said with the completion of the takeover, the EONCap board wants to return the proceeds to shareholders in an expedient manner.

He said Primus (M) Sdn Bhd’s objection to the takeover could not prevent EONCap from proceeding with the payment of dividend because Primus’ appeal had no interim order for a stay.

On April 28 2011, the petition by Primus opposing the takeover of EONCap’s assets and liabilities was dismissed by the High Court with costs.

Primus yesterday lost its appeal to set aside that court decision. It also failed in its appeal to reverse a High Court ruling that validated a shareholders’ meeting held on September 27.

The Court of Appeal ordered Primus to pay costs to the respondents involved in the court case, to the tune of RM1.05 million in total.

Gooi said due to the merger, the next few months will see system integration and transformation of EON Bank branches nationwide. It will also see the assimilation of over 5,800 EONCap staff into HLBB.

Meanwhile, EONCap announced that a major shareholder, Rin Kei Mei, will no longer be a director after he did not seek re-election at the AGM.

01/07/2011 Hong Leong Bank Vesting Order For EON Bank Takes Effect

Key milestone achieved towards realising full growth aspirations of merger

Kuala Lumpur, 1 July 2011 - With effect from today, 1 July 2011, the entire business of EON Bank Berhad ("EBB" or "EON Bank"), including all its assets and liabilities, has been successfully transferred to Hong Leong Bank Berhad ("HLBB") in accordance with the Vesting Order granted by the High Court on 17 June 2011, completing a key merger milestone. EBB becomes a dormant company with immediate effect..

"The Vesting Order by the Court effectively transfers all assets and liabilities (including contractual rights) of EON Bank Berhad to Hong Leong Bank Berhad as at 1 July 2011. While it is effective from today, customers and business associates can fully expect business-as-usual as uninterrupted service and continuity of our banking operations continue as normal.

Like all bank mergers, the full integration process takes a longer time as it involves a complex exercise of migrating all the IT systems, processes and policies onto a single IT platform.

Until then, the Minister of Finance has allowed Hong Leong Bank to continue with the use of the name "EON Bank Berhad" for a period of time. Bank Negara Malaysia has further given approval for us to continue with the use of EON Bank-issued payment and transaction instruments such as passbooks, cheques, banker's drafts as well as ATM, debit and credit cards for a period of time from the date of vesting," explained Ms. Yvonne Chia, Group Managing Director / Chief Executive of HLBB.

"With this approval from the authorities, we can facilitate an orderly and smooth transition to the Hong Leong Bank Brand. We will over a period of time, carefully and systemically wind down the use of EON Bank logos, documentation and payment instruments such as cheques, passbooks and cards. This will be done without causing undue inconvenience to all stakeholders, nor interruptions to customer service and operations for customers and business associates alike of the former EON Bank.

This means payment and banking transaction instruments already issued by EON Bank are still valid for use. All customers and business partners or associates are advised to conduct their branch and banking transactions as usual, until further notice. This also includes conducting transactions at their respective branches. Customers of the former EON Bank may continue to carry out online transactions at www.eonbank.com.my , while existing customers of Hong Leong Bank may continue logging into www.hlb.com.my."

Ms. Chia added, "The business associates of EON Bank, from card merchants to recipients of EON Bank cheques, can be confident that we will continue to honour legitimate documentation and transactions using payment instruments bearing the EON Bank name and logo."

Under the Vesting Order, all contracts entered with EBB before the effective date of the Vesting Order of 1 July 2011, will be vested into HLB. They remain in effect and under the same terms and conditions as mutually agreed by the contracting parties when they entered into the contract originally.

The Vesting Date for EONCAP Islamic Bank Berhad will be announced later.

Ms. Chia further commented, "Coinciding with the effective date of this Vesting Order is the start of the new financial year for Hong Leong Bank. We continue to be on track for the full integration exercise and are making confident strides as an even more Market-driven and Customer-centric organisation. Staff are assimilating and collaborating very well, and we see solid teaming efforts to make sure that the merger is seamless to all customers. The Community has received the merger well, and we thank everyone for their continued support to the Bank. We have every reason to be very optimistic."

08/07/2011 Hong Leong Financial Scouts for Takeovers

Hong Leong Financial Group Bhd. (HLFG), the Malaysian banking and insurance group controlled by billionaire Quek Leng Chan, is seeking acquisitions in emerging markets as it aims to triple its assets and profits in five years.

The group, which has a 20 percent stake in China’s Bank of Chengdu Co. and a banking license in Vietnam, is looking for targets in countries including Thailand and Indonesia, Chief Executive Officer Raymond Choong, 55, said in an interview yesterday. The Kuala Lumpur-based firm may also buy brokerages in Malaysia, he said.

“The global market is now a borderless world,” Choong said. “Being very successful in Malaysia doesn’t make you an important player. China, Vietnam, Thailand and Indonesia are markets with high potential where we excel.”

Hong Leong is expanding abroad as competition increases in its domestic market with the central bank granting more licenses to international lenders including Bank of China Ltd. Its banking unit, Hong Leong Bank Bhd. (HLBK), completed a $1.7 billion

takeover of domestic rival EON Capital Bhd. (EON) in May, enabling it to overtake RHB Capital Bhd. as the nation’s fourth-biggest bank.

Hong Leong Financial shares have climbed 52 percent this year, and Hong Leong Bank rose 49 percent, making them the biggest gainers on the benchmark FTSE Bursa Malaysia KLCI (FBMKLCI) Index.

Failed Merger

Quek, 70, is Malaysia’s fourth-richest man with a net worth of $4.8 billion, according to a Forbes magazine calculation as of March. The billionaire, who inherited part of his fortune from his father, also controls Hong Kong-listed investment company Guoco Group Ltd. and has stakes in hotels and property across Southeast Asia, Forbes said on its website.

Malayan Banking Bhd. (MAY) and CIMB Group Holdings Bhd. (CIMB), the nation’s two largest lenders, scrapped competing talks to acquire Kuala Lumpur-based RHB Capital Bhd. last month after Abu Dhabi’s Aabar Investments PJSC paid an 11 percent premium for a 25 percent stake in the nation’s fifth-biggest lender.

Maybank, as the nation’s largest lender is know, owns bank stakes in Indonesia, Pakistan and Vietnam, and this year acquired Kim Eng Holdings Ltd., a Singapore securities and investment-banking group.

RHB said on June 23 it will focus on its own growth strategies after the merger negotiations collapsed.12/08/2011 CUSTOMERS CAN NOW ENJOY HONG LEONG BANK'S EXPANDED DELIVERY CHANNELS, PRODUCTS AND SERVICES

Major integration milestone achievement brings 329 Branches and over 1,400 Self-Service Terminals to serve the community

KUALA LUMPUR, 12 August 2011 - Hong Leong Bank ("HLB") today announced that it has completed a major integration milestone that effectively allows its customers and community to enjoy an expanded suite of products and services across its enlarged footprint of 329 branches as well as over 1,400 Self-Service Terminals, driven by a combined workforce of both banking groups.

"Since we completed the acquisition of EON Bank's assets and liabilities on 6 May 2011, we have focused our efforts on delivering a speedy integration which will allow us to quickly realize our synergy potential. In just 3 months, we achieved a key harmonization milestone to offer our customers the best of both banks under one Hong Leong Bank," said Ms. Yvonne Chia, HLB's Group Managing Director/Chief Executive Officer.

Beginning today, all former-EON Bank branches will be re-designated as HLB branches, effectively allowing all customers from both banks to conduct banking transactions at all of its branches as well as ATMs, Cheque Deposit Machines and Cash Deposit Machines. Customers may view the full list of services available at HLB's website at www.hlb.com.my.

Payment and transaction instruments issued by the former-EON Bank, which include debit, ATM and Credit Cards as well as cheques and bank drafts, will remain valid to 30 June 2012 or until further notification when they will be replaced with HLB-issued instruments. To facilitate a smooth transition, customers of the former-EON Bank will receive a new HLB passbook when they conduct their next transaction at any branch, while ATM and debit cards can only be replaced at domicile branches.

From today onwards, customers will also benefit from an enhanced suite of products. Ms. Chia elaborated, "The improved product and service offering is the result of putting together the best features and benefits offered by both banks and tailored specifically to the needs of our customers and communities. In conjunction with this, our Group Consumer Banking division has launched a bank-wide campaign themed ‘ Better Together With 329 Branches '! It is our way of thanking and rewarding our customers for their continuous support."

The campaign which starts from 8 August will end on 30 November with promotional offers built around the number "329" as its celebrative theme. To start with, every Branch will have one customer winning a grand prize of 329% per annum deposit interest on their savings account, while other exciting offers include 329 units of Panasonic LCD TVs and 32,900 movie vouchers for Credit Card customers; an Auto Loan interest rate of 0.0329% for one month, as well as many more. Product terms and conditions apply. In conjunction with the campaign, there will also be extensive ground activities including weekend Branch Open Houses in 60 locations nationwide.

The Vesting Date for EONCAP Islamic Bank Berhad ("EIBB") will be announced later. The integration process of both Hong Leong Islamic Bank and EIBB remains on track.

"With today's integration milestone achieved, we have much more to look forward to as a strong and united Hong Leong Bank. The overarching priority for the bank moving ahead is how we can further entrench ourselves in the communities we operate in and become a real and relevant part of their daily lives. I am more than confident that we are able to achieve this, especially by optimising and leveraging fully on our 329-strong branch network. We remain focused on delivering the Hong Leong Bank promise of being a bank for the community," declared Ms. Chia.

21/10/2111 Hong Leong-EON Cap merger to realise earnings visibility in the long term, says OSK Research

KUCHING: Hong Leong Bank Bhd’s (Hong Leong) synergetic merger with EON Capital Bhd (EON Cap) is going from strength to strength in the banking sector via integration and overall operating cost reduction for the merged entity in the long term.

OSK Research Sdn Bhd (OSK Research) opined in a research note, “Post merger, the group was well positioned to capture longer term growth opportunities but we believe that the market may not have fully appreciated the revenue synergies that the larger organisational platform can attain.

“From the revenue standpoint, a wider distribution network, minimal overlap and integrating Hong Leong’s Bank’s superior productivity and efficiency levels across the enlarged distribution and human resource base could potentially create substantial benefits over the longer term.”

OSK Research’s minute 0.4 per cent financial year 2012 (FY12) earnings growth forecast for the post merger entity compared with Hong Leong–EON Cap’s profoma FY11 earnings reflected minimal incorporation of any net positive cost and revenue synergy benefits, which it expected to make a bigger impact from FY13 onwards (second year of the merger).

Hong Leong continued to retain its return-on-equity (ROE) guidance of 16 per cent for FY12 but the market was pricing in an ROE of 13.4 per cent based on the stock’s current FY12 price to book value of 1.68 times.

OSK Research stated, “We too had adopted a conservative and pragmatic view on the initial synergy upside, expecting it to flow through only in the second year of the merger in FY13.

“Yet, our ROE estimate of 14.7 per cent, which is below consensus’ 16.5 per cent and management’s 16 per cent, is still above that implied by the stock’s current valuation.”

The research house factored into the FY12 earnings assumption RM206 million in potential loan loss provision clean-up costs to raise EON Cap’s coverage ratio from 94 per cent to 110 per cent to align it closer to Hone Leong’s 153 per cent on a standalone basis.

This, coupled with an estimated RM144 million in integration cost to be expensed for FY12, prompted the research house to trim FY12 earnings estimates by 4.8 per cent, which nudged down the ROE projection to 14.7 per cent.

This would provide room for positive earnings surprises if both integration and credit costs came in lower than expected in FY12.

The research house noted the three key areas that could surprise on the upside, namely non-interest income (NII), integration cost of the merger and loan loss provision.

With regards to integration cost, OSK Research’s forecast incorporated 80 per cent of the estimated integration cost of RM180 million to be incurred in FY12.

Meanwhile, the bank had hinted at the possibility of balancing out the recognition by timing the cost synergies to be recognised, which would potentially ease the lumpy impact of a front loaded integration cost in FY12.

In terms of loan loss provision, the research house revealed, “We are including a 52 basis point credit cost for FY12 on the assumption that the group may want to align EON Cap’s loan loss coverage ratio closer to Hong Leong’s.”

The research house also pointed out other potential revenue synergies for the merged entity such as a minimal overlap in customer base, developing community SME banking, holistic banking services to nurture SMEs to become larger corporate establishments, enhancing transaction fee income, complementary deposit taking and lending franchise as well as stronger forex and treasury income.

The group’s widened distribution channel of 329 branches and more than 1,400 self-service terminals (second largest distribution network in Malaysia) as well as enhanced staff force would open up opportunities to develop and penetrate new markets.

OSK Research’s conservative stance in incorporating a higher provision clean-up cost for FY12 reduced earnings forecast by 4.8 per cent and fair value to RM12.15 from RM12.70, underpinned by ROE of 14.7 per cent, cost-of-equity of 9.5 per cent and a four per cent growth rate.

24/10/2011 Vesting Order Granted for the Transfer of EONCAP Islamic Bank into Hong Leong Islamic Bank Effective 1 November 2011

Kuala Lumpur, 24 October 2011 - Hong Leong Islamic Bank Berhad ("HLISB") wishes to announce that the High Court had today, 24 October 2011, granted a Vesting Order transferring the entire business including all assets and liabilities of EONCAP Islamic Bank Berhad ("EIBB") to HLISB with effect from 1 November 2011. Following the vesting, EONCAP Islamic Bank Berhad will become a dormant company.

"With the granting of the Vesting Order by the High Court, we are now one step closer towards celebrating Malaysia's first vesting of an Islamic Bank. As it is only effective from 1 November 2011, it will continue to be business-as-usual for customers and business associates of both banks until further notice. Uninterrupted service and seamless continuity of our banking operations at both banks will continue," said Yvonne Chia, Group Managing Director of Hong Leong Bank.

26/02/2013 Hong Leong Bank still sees synergies from EON acquisition

KUCHING: Hong Leong Bank Bhd (Hong Leong Bank) remains optimistic that it will be able to achieve full cost synergies of

RM400 million from its acquisition of EON Bank Group Bhd (EON) over a three-year period, having achieved RM200 million so far.

According to a research report, RHB Research Institute Sdn Bhd (RHB Research) said the bank even believed that it would be able to achieve the full cost synergies of RM400 million by the second year, which was a year ahead of schedule.

Analysts with HwangDBS Vickers Research Sdn Bhd (HwangDBS Research) Lim Sue Lin and Hon Seow Mee in a separate report on the group noted that although it was in the last leg of deriving merger synergies, Hong Leong Bank remained a quality bank despite its cautious management stance.

“In fact, right now the bank is the only listed Malaysian bank with a pure commercial banking business which offers a defensive play away from the volatile capital markets,” Lim and Hon noted.

This was on the back of the group’s recent announcement of its results for the first half of the financial year 2013 (1HFY13), with net earnings of RM986.6 million.

This was mainly driven by unrealised gains in financial derivatives, cost synergies as well as a net loan loss reversal seen during the period, highlighted Alliance Research Sdn Bhd analyst Cheah King Yoong.

Cheah explained, “The stronger profit was mainly driven by a 40.8 per cent jump in non-interest income, supported mainly by unrealised gains in financial derivatives, significant cost synergies and net reversal of loan loss provisions of RM28.2 million driven by 52.1 per cent year on year reduction in collective assessment allowance with the full adoption of FRS139 coupled with strong bad debt recoveries.”

Meanwhile, HwangDBS Research’s Lim and Hon opined that Hong Leong Bank was back to being cautious as business loans remained strong but its utilisation had dwindled.

“That said, consumer loans momentum should remain fairly robust,” they added.

“Loan growth is guided at high single digit. Further branch rationalisation would be carried out post merger to improve efficiency.

“There is room for loan-to-deposit ratio to inch up to ensure that net interest margin remains stable amid competitive pressures on both loans and deposits on the retail front.”

Given the softer loan growth thus far, RHB Research outlined management’s expectations that FY13 loan growth would likely be around high single digit compared with the earlier loan growth guidance of 10 to 12 per cent.

Nevertheless, this implied stronger growth in 2HFY13.

“Growth in the commercial segment remains healthy (at about six per cent) while Hong Leong Bank intends to push for more loan drawdowns and utilisation of credit facilities. A pickup in trade will provide further boost for the group.

“Meanwhile, Hong Leong Bank’s earlier mentioned plan to close some of the overlapping branches (within a one kilometre radius from each other) was well under way,” said RHB Research.

“Approximately 73 branches have been targeted with a completion rate of 60 per cent thus far. The group, however, does not intend to surrender these licenses but rather will use the opportunity to open new branches (which is important for deposit gathering).”