Malaysia

MBSB-AFB Islamic banking entity to start off with RM42 bil assets, says CEO

Malaysia Building Society Bhd (MBSB) is expected to start off its new banking entity in the second quarter of next year with RM42 billion in Islamic assets. The company has recently secured an Islamic banking licence by acquiring Asian Finance Bank (AFB) in a RM644.95 million deal. MBSB’s banking subsidiary will be the country’s second largest standalone Islamic lender after Bank Islam Malaysia, which had assets of RM54.25 billion as at June 30. After the merger MBSB will continue to be the listed holding entity, while AFB will be the wholly-owned subsidiary that runs the banking business. According to MBSB's CEO, Datuk Seri Ahmad Zaini Othman, the banking entity will have a similar composition, with 70% in retail banking and 30% in corporate banking. Also, it will solidify its presence in the property, housing and infrastructure segments.

Global #sukuk likely to hit US$90b this year

Global sukuk issuance will likely reach US$85 billion-US$90 billion (RM356-377 billion) in 2017, driven by stronger issuance from Saudi Arabia, Malaysia, Qatar, Bahrain and Oman. RAM Rating Services said Saudi Arabia and its GCC neighbours had raised sukuk worth US$42 billion at end-October, which was a 215.3% increase from a year ago. Malaysia recorded RM138.7 billion worth of sukuk issuance as at end-October, which exceeded RAM’s full-year projection. Bank Negara Malaysia’s decision to maintain overnight policy rate at 3.0% could spur more sukuk issuance before the end of the year after hinting that monetary policy might be tightened next year.

Bank Islam issues its third #Sukuk #Murabahah RM300 million

Bank Islam Malaysia Bhd (BIMB) had obtained approvals from Bank Negara Malaysia and the Securities Commission Malaysia to establish the third subordinated Sukuk Murabahah programme with the issuance of RM300 million. BIMB said the sukuk has tenure of a 10-year non-callable five years with maturity date on November 12, 2027. BIMB noted the proceeds shall be utilised to finance Bank Islam’s Islamic banking activities, working capital requirements and other corporate purposes.

MBSB buys Asian Finance Bank for RM645m, set to be an islamic bank

#Malaysia Building Society Bhd (MBSB) is buying Asian Finance Bank (AFB) for RM644.95 million in cash. MBSB stated that the proposed merger would result in it becoming a full-fledged Islamic bank. MBSB entered into a conditional share purchase agreement with the shareholders of AFB. MBSB will pay RM396.89 million in cash and RM255.51 million via the issuance of 225.51 million new MBSB shares at RM1.10 each. The cash option was based on a valuation of 1.2 times AFB net assets valued at RM496.12 million as at December 2016, while the shares option was based on a valuation of 1.5 times the accepted net asset. MBSB said the proposed merger was expected to be completed by the first quarter of 2018. The subsequent tranches of the proposed transfer of assets and liabilities and disposal of the residual should complete in three years from the first tranche transfer.

Malaysian Islamic banking to heat up as smaller lenders #merge

Malaysia Building Society (MBSB) is a step closer to becoming a full-fledged Islamic bank after the proposed acquisition of Asian Finance Bank (AFB). If the merger takes place, the tie-up between non-bank MBSB and AFB would create the country's second largest Islamic bank.

HSBC hopes for more Islamic financing in Southeast Asia #rail #projects

HSBC Bank #Malaysia hopes to see a lot more Islamic financing instruments used in the development of the Southeast Asia railway network which connects China to the region. CEO Mukhtar Hussain said HSBC had a unique value proposition in this matter, being the first bank to issue sukuk in Malaysia. The railway network involves building more than 3,000 km of rail lines from China’s Yunnan province through Laos, Cambodia, Thailand, Malaysia, Singapore and Indonesia. It is one of China’s seven main transport routes under the Belt and Road Initiative (BRI). The project adopts a public-private partnership financing approach, one that puts the financing requirements efficiently to the private sector and therefore can relieve the pressure from the nations’ budget.

#Malaysia's MBSB agrees to buy Asian Finance Bank for $152 mln

Malaysia Building Society Bhd (MBSB) plans to acquire Asian Finance Bank (AFB) from its foreign shareholders for 645 million ringgit ($152.5 million). Malaysia Building Society agreed with AFB's shareholders to pay 396.9 million ringgit in cash and the issuance of 225.5 million new shares at 1.10 ringgit per share. The deal values AFB at 1.3 times book value, MBSB said. MBSB has sought to become a full-fledged bank in the last few years. In 2014 a three-way merger deal with CIMB Group Holdings and RHB Bank was planned, but the plan fell through in early 2015. Talks with Bank Muamalat Malaysia Bhd in the last quarter of 2015 also collapsed.

Business schools teach Islamic finance, and all are welcome

The world's growing Muslim population opens up near limitless potential for Islamic finance. However, the pool of talent is very limited at the moment. The International Center for Education in Islamic Finance (INCEIF) welcomes students from all over the world. Since its opening in 2006, half of the 1,300-plus graduates have been Malaysians, but the other half have been from over 70 countries. The list includes predominantly Muslim nations, like Indonesia, Pakistan and Somalia, but one does not have to be Muslim to enroll. Malaysian authorities are encouraging other educational endeavors, too. The Islamic Banking and Finance Institute Malaysia will launch two new programs offering professional certifications in Islamic finance. The two certifications, chartered Islamic banker and chartered takaful practitioner, are the equivalent of conventional financial qualifications.

IFSB: Islamic #FinTech Finance Bigger in Asia than First Thought

Islamic fintech finance in Asia is anticipated to be bigger than originally thought. According to the secretary-general of the Islamic Financial Services Board (IFSB), Zahid ur Rehman Khokher, Islamic finance has the potential to expand further into the Asian market. He noted that the IFSB has been closely monitoring global developments in fintech. Yet, he feels there is a shortage of staff with the appropriate skills. Earlier this month, it was reported that Malaysia was the idea test bed for developing fintech solutions. According to Marzunisham Omar, assistant governor at the Bank Negara Malaysia, even though Islamic finance is still growing within the country, now is the time for the sector to embrace the fintech wave.

Scope of #waqf in #Malaysia should be expanded

The scope of waqf funds need to be expanded in Malaysia beyond the traditional norms of building mosques and Muslim cemeteries. Bank Rakyat chairman Tan Sri Shukry Mohd Salleh said the waqf funds can be fully utilised in other programmes. Cash waqf, he added, had been identified as one of the major tools that could resolve poverty issues in Malaysia. In order to eradicate poverty, Shukry said waqf funds should be distributed within four key sectors, namely health, education, economic development and financial assistance for small enterprises. He also said that even though a lot of waqf efforts have been made, the waqf collection system needs to be streamlined and improved professionally.

#Malaysia's #Green Islamic #Sukuk funds green tech projects

Malaysia has the potential for green financing 130 potential projects comprising 111 renewable energy (RE) projects and 19 energy efficiency (EE) projects that are worth about RM1.9 billion and RM248 million. Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili said the country was on the right path to be the world leader in green investment. Maximus said Malaysia was leading the world in green investment through the introduction of Green Islamic SRI (Sustainable and Responsible Investment) Sukuk. This year Malaysia issued the Green Islamic SRI Sukuk amounting RM250 million for solar project to Tadau Energy and RM1 billion for Quantum Solar Park Malaysia. The recently launched Green Technology Master Plan 2017 (GTMP) is aimed to create a low carbon economy. Maximus also said Malaysia was committed to reducing its greenhouse gas emission intensity of its Gross Domestic Product by up to 45% by year 2030 in accordance with the Paris Agreement.

MITI approves RM1.6b under shariah-compliant #SME financing scheme

The #Malaysian Ministry of International Trade and Industry (MITI) has approved funding totalling RM1.595 billion under the Shariah-compliant SME (Small and Medium Enterprises) Financing Scheme. Deputy Minister Datuk Ahmad Maslan said since the scheme was started in 2012, 1,181 applications had been received but only 971 applications had been approved. He added that the scheme would be administered by 13 participating Islamic banking institutions and the Federal government would bear 2.0% of the profit rate. The rebate is specifically to assist the SMEs which carry out business activities in all Shariah-compliant sectors. Ahmad said in Penang some RM112.6 million had been approved to-date to 76 SMEs which were Shariah-compliant.

Al Rajhi Bank eyes Asean #expansion

Al Rajhi Bank #Malaysia outgoing chairman Datuk Seri Dr Nik Norzrul said his successor would continue with the plan to expand the bank’s operation, targeting neighbouring markets like Singapore and Indonesia. Nik Norzrul has been with Al Rajhi Bank since the bank established its wholly-owned subsidiary in Malaysia in 2006. He has been a board member of Al Rajhi Bank Malaysia since 2006 and its chairman since 2015. Today the bank has assets worth a total of RM9bil, compared with RM291mil in 2006. In the retail segment, the bank continues to see growth in the demand for current account/savings account services. In the corporate segment, Nik Norzrul said Al Rajhi Bank Malaysia was working on strengthening its presence targeting owner-led enterprises as well as SMEs.

Danajamin an unsung hero of Islamic capital market

In #Malaysia Danajamin is of national importance because of its role to ensure continued flow of credit in the financial system. It contributes to the democratisation of the capital market by giving financial guarantee insurance to companies that are raising funds from the market through the issuance of bonds and sukuk. Danajamin has provided credit enhancement guarantees for RM9 billion bond/sukuk programmes issued by 31 Malaysian companies across various sectors. These include guaranteeing sukuk issuances to finance the West Coast Expressway Project, connecting the west coast of the peninsula from Banting, Selangor, to Taiping, Perak. Recently, Danajamin has become the first financial guarantee insurer in the world to issue its own sukuk. The agency issued its maiden Tier II Subordinated RM500 million Sukuk Murabahah, with a tenure of 10 years and priced at a yield of 4.8% per annum on Oct 6. The demand from investors was so encouraging that Danajamin decided to upsize the issuance from an initial RM300 million to RM500 million.

#Malaysia is Perfect ‘Test Bed’ for #FinTech Development: Central Bank

Malaysia’s central bank said that the country is the ideal test bed for developing financial technology (fintech) solutions. Marzunisham Omar, assistant governor at Bank Negara Malaysia, explained that the growth of the sector has provided innovative opportunities within the financial industry. While the country’s central bank is keen to push a fintech agenda, its position on digital currencies is not as clear. Bank Negara governor Muhammad bin Ibrahim said that a blanket ban on cryptocurrencies was not out of the question. The bank is currently developing guidelines for them. Either way, by the end of the year, the bank is expected to reveal its position on the cryptocurrency market.

#Malaysia to issue more #green #sukuk for infra projects

Malaysia will issue more green sukuk to finance environmental-friendly infrastructure projects. Energy and Green Technology Minister Datuk Seri Dr Maximus Johnity Ongkili said the government was confident it would achieve its renewable energy generation target of 7,200 megawatts (MW) by 2020. The solar energy will contribute 2,080MW to it. In July this year, Malaysia issued the world’s first green sukuk, RM250 million Sustainable Responsible Investment (SRI) sukuk, to finance the construction of an LSS project in Kudat, Sabah. Quantum Solar announced the world’s largest green SRI sukuk issuance of RM1 billion recently. The projects are expected to create up to 3,000 jobs, generate electricity for up to 93,000 households and reduce carbon emissions by 210,000 tonnes annually.

IBs want property lending rule scrapped

Investment banks (IBs) want Bank Negara Malaysia to withdraw the property lending guideline, which was introduced in 1997. It stipulates that a bank’s credit facilities should not exceed 20% of its total outstanding loan base. Compliance with this requirement is calculated on a quarterly basis. For IBs, the guideline mainly affects their underwriting business. They think the guideline is outdated, especially since there are already other macroprudential measures introduced by Bank Negara in recent years. The Malaysian Investment Banking Association (MIBA) had highlighted the issues affecting the industry to Bank Negara. It is understood that the central bank is currently reviewing the guideline.

Danajamin issues RM500m tier-2 subordinated #sukuk

#Malaysian Danajamin Nasional has issued its inaugural RM500 million, tier-2 subordinated sukuk. It is part of a RM2 billion of senior and subordinated Sukuk Murabahah facility. The subordinated sukuk has a tenure of 10 years and is rated AA1 by RAM Rating Services and AA+ by the Malaysian Rating Corporation. The inaugural issue was oversubscribed, receiving a response of about RM800 million from a diverse range of investors. Danajamin CEO Mohamed Nazri Omar said that a total of 16 investors participated in the inaugural issuance and the sukuk achieved a yield of 4.80%. The issuance also sees Danajamin strengthening its regulatory capital level, enabling it to continue meeting its developmental mandate to stimulate the sukuk market.

SC and ISRA publish textbook on "#Sukuk: Principles and Practices"

In #Malaysia the Securities Commission (SC) and The International Shari’ah Research Academy for Islamic Finance (ISRA) have released a joint publication on "Sukuk: Principles & Practices". The textbook was launched by His Royal Highness Sultan Nazrin Muizzuddin Shah. The new textbook focuses on the theories and practices governing sukuk across various jurisdictions while adopting a global perspective. Is serves as a source of reference to academicians, students and practitioners to gain greater understanding on sukuk. Recently, Malaysia witnessed the issuance of the world’s first green sukuk under SC’s Sustainable & Responsible Investment (SRI) Sukuk framework. This affirmed the country’s position as a leading Islamic finance marketplace and centre for sustainable finance.

Etiqa, ethics and #insurtech

Insurance technology or insurtech strives to innovate the insurance business of risk management. As a subset of fintech, insurtech uses big data to form a precise risk profile of the subject that is being covered. According to Maybank Ageas CEO Kamaludin Ahmad, one example is the telematics system in vehicle-monitoring. He said the intended market would include logistics companies, delivery companies and even small-medium enterprises with only three to five vehicles. Kamaludin believes insurtech can be sold and will be beneficial to people. However, it requires a change of mindset. Maybank Ageas and its household brand Etiqa Takaful are dominating the market share, capturing over half the total insurance and takaful market. Some argue that the size of the Maybank-Etiqa insurance is too big, to the extent of being deemed a monopoly. Kamaludin thinks Maybank is far from monopolising anything, the focus is not on pushing sales, but on being the best in the sector.

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