Maybank (MBBM.KL), Malaysia’s largest lender by assets, is snapping up Singapore broker Kim Eng Holdings for $1.4 billion, in a move to strengthen its grip on the regional stockbroking industry and diversify the lender’s source of overseas revenue.

The acquisition comes as Southeast Asian markets are on a roll, with Thailand and Indonesia ranking as the best performing major markets in Asia last year, spurred by foreign fund inflows and robust economic growth.

 

“What Maybank wants to do is expand its stockbroking operations, and it makes sense for it to acquire a company which provides immediate exposure,” said Vincent Khoo, UOB Kay Hian’s head of research.

 

Investment banking and stock broking are becoming increasingly important for Malaysian banks as stiffer domestic competition puts further pressure on net interest margins on its loans.

 

Two of the best performing Malaysian banks in 2010 were CIMB Group (CIMB.KL) and RHB Capital (RHBC.KL), which were top dealmakers in terms of number and value respectively.