Abu Dhabi Commercial Bank (ADCB) is proceeding with the auction of its stake in Malaysian bank RHB and won't let planned bids by lenders Maybank and CIMB for RHB derail the process, a source said on Monday.

RHB, Malaysia's fifth-largest lender with a $7.3 billion market value, is set to be the subject of a bidding war between rivals Maybank and CIMB, in what could be Asia-Pacific's fourth-biggest banking deal ever.

ADCB is selling its 25 per cent stake in RHB and an earlier auction had drawn interest from Japan's Sumitomo Mitsui Financial Group (SMFG) and Carlyle, said the source with direct knowledge of the matter.

The interest by Maybank and CIMB, Malaysia's top two lenders, had cast doubt on ADCB's auction, but the source said it would proceed.

'A sale is a sale,' said the source, who declined to be named because of the sensitivity of the matter.

'The process itself, at the end of the day, is ADCB is obviously going to gravitate to a price that makes sense for them whether it's from the local guys or from the foreign guys. In theory if the locals are buying control they should be paying more. In that respect it's the same, no conflict,' the source said.

Analysts have said that bidders for ADCB's stake may be less keen on the 25 per cent block of RHB shares if RHB is to be absorbed into a much bigger entity.

Foreign players interested in ADCB shares were looking to play a more substantial role in the Malaysian banking sector, but a merger with Maybank or CIMB would dilute their shareholding.

ADCB declined to comment when contacted by Reuters.

Sources had earlier told Reuters that Maybank has hired Japanese investment bank Nomura to advise on its takeover bid while RHB Capital has engaged Credit Suisse as an adviser.

RHB shares were down half a percent at 9.93 ringgit by the midday break, compared with the broader market's 0.3 percent drop.-Reuters