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BIMB Holdings yesterday received shareholders' nod to buy the remaining 49% stake it does not own in Bank Islam Malaysia Bhd from Dubai Financial Group (DFG) and Lembaga Tabung Haji (LTH). The acquisition is expected to be accretive to the group's earnings by another 5% from the financial year ending Dec 31, 2014 (FY14). With BIMB's current 51% controlling stake in Bank Islam, the Islamic banking unit is already contributing 85% to the group's revenue and earnings. BIMB shareholders also gave the green light to BIMB to raise up to RM3 billion through a combination of a rights issue and a sukuk to part-finance the acquisition. Besides, BIMB might reportedly acquire stake in Bank Muamalat Malaysia from state investment fund Khazanah Nasional and conglomerate DRB-Hicom.
Bank Negara has rejected BIMB Holdings’ proposed move to issue sukuk using Bank Islam Malaysia’s shares as security for the debt, but has allowed the former to acquire the remaining 49% stake in the latter. The central bank has then requested to source and notify the bank on suitable alternative assets as security for the proposed sukuk. An analyst felt the rejection by the central bank would not deter or derail BIMB’s plans to acquire Bank Islam, although it may slow down the purchase process. Last month, BIMB had announced the proposed acquisition of the remaining stake in Bank Islam – 30.5% from the Dubai Financial Group and 18.5% from Lembaga Tabung Haji – for a total cash consideration of US$884.6mil (RM2.87bil). This was to be financed via a two-for-five rights issue of 426.7 million new shares, and a sukuk issuance of up to RM1.47bil.
Bank Islam Malaysia is confident of achieving more than 15% growth in profit before tax and zakat this year compared with RM600.3 million last year. Managing director Datuk Seri Zukri Samat said consumer banking would continue to be the main contributor to achieve the target. 70% of the financing portfolio is to be contributed by consumer banking and the balance of 30% from corporate and commercial banking. For the first quarter of this year, the bank raked in profit before tax and zakat of RM151.5mil. However, Zukri said the economic growth which is somewhat slow currently and the new guidelines on responsible lending might affect the bank's financing growth.
BIMB Holdings Bhd is likely to conclude the purchase of the 18.5% stake held by Lembaga Tabung Haji (LTH) in Bank Islam Malaysia Bhd by the end of the month. BIMB owns 51% of Bank Islam, while the remaining 30.5% stake is held by Dubai Financial Group (DFG). LTH, meanwhile, is the ultimate holding company of both BIMB and Bank Islam. Apart from its direct interest in Bank Islam, the pilgrim fund also owns a 51.5% stake in BIMB. There were reportedly no problems in the talks between BIMB and LTH, with pricing done at arm’s length on market benchmarks and in the best interest of the shareholders. The two block of shares are likely to be valued between 1.6 times and 1.8 times price-to-book value. If both talks with DFG and LTH were successful, then BIMB would fully own Bank Islam. An announcement on both stake sales is expectyed to be made by end-July.
Bank Islam Malaysia is exploring opportunities to expand its business in South-East Asia, especially in Indonesia. However, the bank has not identified suitable joint-venture partners to penetrate foreign market, according to its managing director, Datuk Zukri Samat. Bank Islam was earlier reported to have held talks with an Islamic bank in Indonesia to acquire up to 40% stake in the latter. Meanwhile, Zukri said, the bank aimed to expand its operations by opening five branches nationwide by year-end. Bank Islam recently closed a deal regarding a business zakat of RM320,000 to Majlis Agama Islam Johor. Zukri said the zakat payment represented part of the total RM9.2mil for financial year 2012, based on its profit of RM600mil the previous year.
Bank Islam Malaysia Bhd (BIMB) expects its 'Dream-of-a-Lifetime' campaign, starting today to Sept 30, 2013, to increase the customers' uptake of the Al-Awfar Savings and Investment account. Just as in the previous campaign, the latest promotional initiative also offers Al-Awfar customers the opportunity to win cash prizes of up to RM1 million. To be eligible for the draw, the account holders needed to maintain a minimum balance of RM1,000 in their accounts until Dec 31, 2013. Each RM1,000 deposited will entitle the customers one entry for the prize draw. BIMB said the campaign will be opened to all existing as well as new account holders. To date, the bank has secured approximately RM1.54 billion in deposits through Al-Awfar of which 90 per cent are in Al-Awfar Savings Account.
Bank Negara Malaysia (BNM) has extended the deadline for the negotiations among BIMB Holdings Bhd, Dubai Financial Group LLC and Lembaga Tabung Haji (LTH) over the Bank Islam Malaysia Bhd stake to July 31. Following the extensión of the deadline, a formal approval shall be sought for the proposed acquisition as mutually agreed among the parties. BIMB already owns 51% in Bank Islam. A 30.5% stake is with the Dubai Financial Group (DFG) while 18.5% is held by Lembaga Tabung Haji (LTH). BIMB is seeking to purchase LTH's stake in Bank Islam. LTH also owns a 51.5% stake in BIMB. BIMB may have to fork out RM2.7bil to own 100% of its unlisted banking unit Bank Islam.
The listed vehicle for Bank Islam Malaysia, BIMB Holdings is looking at several options to expand through overseas penetration and local expansion. According to Bank Islam Malaysia managing director Datuk Zukri Samat, the bank is still pursuing plans of expansion to Indonesia through a strategic partner with broad experience. As a fully fledged Islamic bank, the task is more challenging, he said. Moreover, the bank is also extending the time for its discussions with the Dubai Financial Group over the 30.5% stake in Bank Islam to the end of the months, said BIMB group managing director Johan Abdullah.
The board of BIMB Holdings Bhd is set to deliberate on Dubai Financial Group LLC's (DFG) sale of a 30% stake in Bank Islam Malaysia Bhd. BIMB's group managing director and CEO Johan Abdullah said that there is no official agreement yet, and that the board is going to discuss this by the end of the month. He added that the sale must have value proposition and earnings accretion for shareholders of the company as a whole. Bank Negara Malaysia (BNM) gave BIMB Holdings until June 30, 2013 to complete its negotiations to buy DFG's 30% stake in Bank Islam Malaysia. Therefore, the parties must ensure the negotiations are completed within this deadline.
Talks between BIMB Holdings and the Dubai Financial Group (DFG) over the latter's 30.5% stake in Bank Islam Malaysia have stalled. This is because a long-awaited plan by BIMB to transfer its listing status to Bank Islam is nearing fruition, a prospect DFG finds more attractive than hiving off its interest to pare down debts. The bigger picture, however, is that pilgrim fund Lembaga Tabung Haji, the parent to both BIMB and Bank Islam, is revisiting the idea of a mega Islamic bank involving a merger between BIMB and Bank Muamalat Malaysia. Bank Islam managing director Datuk Seri Zukri Samat said the lender might carry out an initial public offering (IPO) within a year or two.
Bank Islam Malaysia targets its financing segment to grow about 20 per cent to 25 per cent this year. Its Director of Business Development Khairul Kamarudin said the target would be achieved through the introduction of four new products related to technology and microfinancing. He added that all the products will be novelty to the market. However, the bank has not obtain any regulatory approvals yet. Khairul said the bank is also targeting to reduce further its non-performing loan (NPL) ratio and to increase its retail deposits by 15 per cent this year.
Bank Islam Malaysia has defended its recent move to suspend its chief economist Azrul Azwar Ahmad Tajuddin after he had predicted a narrow win for Pakatan Rakyat in the upcoming general election. However, a bank source said predictions on the elections are personal opinions that don't in anyway affect financial institutions like Bank Islam. Nevertheless, the bank discovered evidence of violations of the bank's internal policies that were so serious that warranted the bank to lodge a report with the commercial crime division of the police. Further internal investigations by the bank also revealed that Azrul had sent out series of emails relating to the bank's official documents from his office to third parties, including confidential minutes of the bank's board meeting. Azrul is due to appear before the bank's disciplinary board in March.
Bank Islam Malaysia today confirmed that the suspension of its chief economist Azrul Azwar Ahmad Tajudin was due to his prediction of the results of Election 2013. The bank's current policy is to suspend its staff if they engage in political activity or make political comments. According to a statement, any staff irrespective of their position, who has breached the Bank’s internal policy, will be suspended with full pay, to facilitate investigation.
Bank Islam Malaysia lodged two police reports against its suspended chief economist, Azrul Azwar Ahmad Tajudin for allegedly possessing and leaking confidential documents. Azrul was found in the possession of the minutes of the bank’s board of directors’ meeting which were reportedly sent to a third party last June. The police is investigating the case. Azrul was suspended by the bank last week after airing his comments on political issuses.
The chief economist of Bank Islam Malaysia Bhd was suspended from his duties because of his prediction that the opposition would win the upcoming general election. He confirmed that he was fully aware that he was putting his position at the bank on risk. Kajian Politik untuk Perubahan (KPRU) urged in a statement to lift the suspension because it contradicts the right to freedom of speech of the bank's employees. However, the response of Bank Islam was that according to their policy any employee including management, if they behave irrespectively of their position, will be suspended with full pay, to facilitate investigation.
The five-year loan was used to fund Dubai Group's acquisition of a 49 per cent stake in Bank Islam Malaysia.
Dubai Group has stakes in Dubai-based investment bank Shuaa Capital, Greek group Marfin Investment Group and Australia's Citigold Corp.
Trade Arabia reported on 28 April that the RM 500 mn Sukuk issues is approved by the market regulator.
Bank Islam Malaysia and Kuwait Finance House (Malaysia) are the joint principal advisers, lead arrangers and lead managers for the issue.
Kuwait Finance House shall be the guarantor for the sukuk programme. Malaysian Rating Corp has assigned a long-term rating of AA+(bg) for the issue.