According to City AM, sources have said proposals submitted to CIMB have called for it to combine with RHB Capital and the Malaysia Building Society (MBSB), with the latter being acquired through a cash and shares deal.
The deal terms will reportedly be worked out during 2015.
The news follows previous merger discussions between the three banks to create a conglomerate with assets totalling around $190bn, which would make it Southeast Asia’s fourth-largest bank.
JPMorgan is advising CIMB, Credit Suisse is advising RHB, while MBSB is being advised by Citigroup, the sources added.
The three banks did not provide comment on the matter.