SINGAPORE - Malaysia's crowded banking sector can benefit from mergers and acquisitions, executives from the country's top investment funds told a conference on Monday, seeing opportunities to cut costs and compete with new entrants into the industry. Rick Ramli, Permodalan Nasional Bhd's PNB chief investment officer for private and strategic investments, said that there are still sub-scale banks, as you think about higher compliance costs and non-traditional competition, so you need to invest and scale up, as well as invest in core systems and technology to upgrade to digital platforms. The banking industry in Malaysia is poised to get more competitive after the central bank issued five digital banking licenses at the end of April. Sources said last week that Malaysia's second-richest man Quek Leng Chan is considering options for his stake in Hong Leong Bank, including a merger. Amir Hamzah Azizan, CEO of the Employees Provident Fund EPF, said that the Malaysia's banking sector had 26 firms, with the top five lending firms commanding a combined market share of about 48 per cent. He said that it is probably due to some form of reconsolidation. The consolidation was logical but it depended on timing and pricing, according to Khazanah Nasional Managing Director Amirul Feisal Wan Zahir. He said that it makes sense for people to merge and we see various permutations of that happening. According to Refinitiv data, EPF is the top shareholder in RHB Bank Bhd with a 42.1 per cent stake, besides holding minority stakes in other lenders, including Hong Leong Bank and Public Bank Bhd. PNB is the biggest shareholder in Maybank, the country's largest bank, with a 46.6 per cent stake, while Khazanah is the biggest shareholder of second-ranked lender CIMB Group Holdings Bhd with a 24.8 per cent stake.