KUALA LUMPUR - Malaysia's top two banks said in separate statements on Tuesday they planned to start merger talks with the country's No 5 lender RHB Capital in a bid become one of Southeast Asia's largest banking groups.

Malayan Banking, the country's largest lender by assets, and No 2 lender CIMB Group, said they had received the central bank's nod to commence negotiations with RHB Capital and its shareholders. Bank Negara Malaysia's approval - a prerequisite for any corporate negotiations involving local financial institutions - is valid for three months.

Talk of banking mergers has been rife after RHB Capital's 25 per cent shareholder, the Abu Dhabi Commercial Bank, put its stake up for sale. Reuters news agency earlier reported that the bidders for the stake include Sumitomo-Mitsui Financial Group and private equity firms Carlyle and JC Flowers.

"The potential transaction, if it materializes, would be consistent with Maybank's vision to become a regional financial services leader, and support its strategic objectives of being the undisputed No 1 retail financial services provider in Malaysia and the leading Islamic bank in Asean [Association of Southeast Asian Nations]," Maybank chief executive Wahid Omar said in a statement.

The transaction will be evaluated based on the potential for value creation for Maybank's shareholders, he added.

CIMB Group chief executive Nazir Razak said: "It is incumbent on us to engage on this opportunity to put forward a value-creating merger between the two banks and support the national banking consolidation agenda."

Mr Nazir, however, said negotiations hadn't yet commenced, and it may take "a few weeks and possibly more, for us to explore possibilities with RHB's management and shareholders."

Analysts said the completion of the acquisition by Hong Leong Bank of the assets and liabilities of EON Capital to create the country's No 4 bank this month was one likely trigger for Tuesday's move.

"We see the acquisitions as primarily to gain size," said ECM Libra head of research Bernard Ching.

OSK head of research Chris Eng said he couldn't see immediate synergistic merger benefits for either party.

"We're a bit surprised by this," he said, adding that CIMB had earlier dismissed the market rumour that it was planning to bid for RHB while Maybank had said it planned to focus on "organic growth."

Mr Eng said with a likely bidding war for RHB, the situation "could get interesting."