The mega bank merger of CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd (MBSB) will likely start in the first quarter of 2015, upon receiving the nod from Bursa Malaysia and shareholders.

RHB Islamic Bank Bhd managing director/chief executive officer, Ibrahim Hassan, said the banks now were at discussion stage to finalise the proposed merger.

"At this moment, we are working hard towards meeting the due diligence (investigation and audit of the proposed merger) and we are also conducting integration meetings," he told a media conference at the 11th Kuala Lumpur Islamic Finance Forum 2014 here Monday.

Ibrahim said the meetings were an ongoing process and they had not decided on the holding bank nor the 'captain' of the merger.

It was reported that all the three banks announced to Bursa Malaysia that the merger would see the CIMB Group, which is the second largest banking group in Malaysia, dispose of all its assets and liabilities of RHB Cap via a share swap at an exchange ratio of one RHB Cap share for 1.38 CIMB Group shares.

This is based on a benchmark price of RM7.27 per CIMB Group share and RM10.03 per RHB Cap share, translating into a price-to-book value (P/BV) ratio of 1.7 times and 1.44 times for CIMB Group and RHB Cap, respectively.

This valuation is based on CIMB Group and RHB Cap's book values of RM4.28 and RM6.97 as at June 30.

In terms of the all-share swap for the merger, this will require an issuance of 6.04 billion new RHB Cap shares and enlarge the share capital of RHB Cap to 8.61 billion shares.

The second part of the deal involves the proposed merger of CIMB Islamic, RHB Islamic and MBSB to create a mega-Islamic bank.

This newly-created mega Islamic bank will remain a subsidiary of the merged CIMB-RHB.

Under this deal, CIMB Islamic will acquire all the assets and liabilities of MBSB at RM7.77 billion, or RM2.82 per share. MBSB shareholders will have a choice either to accept cash or new shares in the unlisted CIMB Islamic group.

At RM2.82 per MBSB share, this represents a P/BV of 1.91 times.