IslamicFinance.de

The planned amalgamation of CIMB Group Holdings Bhd., RHB Capital Bhd. and Malaysia Building Society Bhd. has stalled as tumbling oil prices wreak havoc on the economy. The merger would have been the nation’s largest ever M&A transaction. Central bank Governor Zeti Akhtar Aziz first raised the idea of an Islamic finance megabank more than five years ago. A license slated to be awarded in 2011 for a multinational lender to be formed between Asia and the Middle East didn’t materialize, depriving the $1.7 trillion global industry of a growth engine. Nevertheless, RHB said in a statement that the parties were still in discussions.

Universiti Islam Malaysia (UIM) and CIMB Islamic have put in place agreements for their cooperation in promoting the development of higher education through a special endowment grant to establish the Chair for Waqf and Islamic Finance Management Studies as well as the establishment of CIMB Islamic Primary Resources for Islamic Finance Special Library. UIM President, Tan Sri Prof. Dr. Mohd. Yusof Noor and Chief Executive Officer of CIMB Islamic, Badlisyah Abdul Ghani signed two documents of Memorandum of Understanding (MoU). Both initiatives aim to enhance knowledge and capacity in the field of Islamic Finance and Waqf management.

Bank Islam Malaysia Bhd is offering a moratorium of up to six months for its financing products' monthly installment payments to flood-affected customers which include Personal Financing-i, Vehicle Financing-i and Home Financing-i. The "Prihatin Programme" aims to ease the financial burden during this emergency situation.

Malaysia is on track to become an international Islamic financial hub, Deputy Finance Minister Datuk Ahmad Maslan said. He said according to the Bank Negara Annual Report, Malaysia was ranked second after Saudi Arabia in Islamic banking with the total Islamic financial assets reaching RM599.5 billion, financing (RM408.1 billion) and deposits (RM472.1 billion). Ahmad said Malaysia was also ranked second after Saudi Arabia in takaful (Islamic insurance), while in the global sukuk market, Malaysia was ranked first with the United Arab Emirates trailing in the second place.

Malaysian sukuk investors are designing strategies for 2015 that will profit as a new tax both pushes up inflation and forces central bank rate increases. Malaysian consumer-price increases will average 4 percent in 2015, the highest in seven years, as a new consumption tax starts in April. One-year interest-rate swaps climbed to a six-year high of 3.87 percent this week. Experts recommend buying Islamic bonds in the middle of the so-called yield curve, which are less exposed to losses from inflation and interest-rate moves. The government will implement a 6 percent goods and services tax as part of efforts to cut the fiscal deficit that included scrapping fuel subsidies.

Takaful Ikhlas Bhd is confident the gross contributions for its financial year ending March 31, 2015 (FY15) will hit RM800 million, up from RM772 million in FY14, driven by its newly launched and final quarter awareness programmes. President and Chief Executive Officer, Ab Latiff Abu Bakar said the full-year target was achievable as the company had already secured RM400 million in gross contributions in the first six months of FY15. Ab Latiff said more promotional campaigns would be executed in the fourth quarter of FY15, that is from January-March next year, and expected non-Muslims to account for one-quarter of customers by end-March 2015.

Malaysian financial services firms have an excellent opportunity to play a role in the growth of Islamic finance in the Gulf region, said Mohammed Ayman Al Tajer, director of financial institutions supervision directorate in Bahrain. Vast opportunities in the Gulf are helped by strong economic growth and demand for more sophisticated financial services. There are also opportunities in areas such as insurance and fund management as the financial sector in the Gulf continues to diversify. He added that standardisation remains the key challenge in the industry, as well as lack of trained professionals and scholars and awareness of Islamic finance.

atuk Seri Abdul Hamidy Abdul Hafiz, the chief executive officer (CEO) of Kuwait Finance House (M) Bhd (KFH), has tendered his resignation. According to officials, the bank’s board had considered Hamidy’s request to resign. Pending approval by Bank Negara on the appointment of a new CEO, KFH said its board had appointed Datuk Mohamad Aslam Khan Gulam Hassan, who is currently the chief recovery officer, as the acting CEO, effective November 27. KFH also said it had appointed Mohammed Nasser Al Fouzan as chairman of the board of directors, effective November 26.

The Islamic Research & Training Institute (IRTI) of the Islamic Development Bank (IDB) Group, and CIMB Islamic Bank Bhd of Malaysia signed a memorandum of understanding towards developing Islamic Finance Country Reports (IFCR) on Malaysia and Indonesia. The IFCR is expected to provide in-depth information, and independent due diligence to facilitate the growth and development of the Islamic finance industry in IDB Group member countries and encourage investment by enhancing transparency. Through this combined initiative, the two institutions aim to facilitate access to information that is currently not available to stakeholders.

Malaysia Building Society Berhad (MBSB) is planning a second issuance of its structured covered sukuk commodity murabaha programme. The proposed deal will come nearly a year after the government-owned company sold a debut RM495 million multi-tranche transaction via sole lead manager RHB Investment Bank. The second issue is targeted to raise up to RM700 million. MBSB is hoping to extend the tenors to 10 years in the new issue. The bonds are rated AA1, higher than the A2 corporate rating for MBSB. RHB will be leading the deal again, and may be joined by one or two other banks. The deal is expected to close by the end of the year.

Turkish participation bank Kuveyt Turk has mandated banks to issue sukuk in Malaysia, aiming to raise as much as 2 billion ringgit ($596.7 million), which will be its first foray into the southeast Asian Islamic debt capital market. Kuveyt Turk, 62 percent owned by Kuwait Finance House , said in a statement it has mandated CIMB Investment Bank Berhad, Kuwait Finance House Berhad and Maybank Investment Bank Berhad. The last time Kuveyt Turk was in the market was in June, when it issued a $500 million five-year sukuk that attracted over $3.25 billion in orders. In July, Turkiye Finans became the first Turkish lender to issue ringgit-denominated sukuk in Malaysia raising 800 million ringgit.

There is a growing role for Japan in the development of the Islamic finance market, according to RAM Ratings. RAM said tax reforms were introduced in 2011 to level the playing field for the issuance of J-Sukuk and conventional bonds for tax purposes, and amendments had also been made to Japanese Securitisation Law to facilitate the issuance of J-Sukuk. While there has yet to be any issuance of J-Sukuk in the Japanese market, BTMU Malaysia Bhd – a wholly-owned subsidiary of Bank of Tokyo-Mitsubishi UFJ – has taken the first important step by debuting a US$500mil Sukuk programme in Malaysia in September.

The Malaysian government plans to roll out a new sharia-compliant investment platform next year. The government is backing the Investment Account Platform (IAP) with an initial start-up fund of 150 million ringgit ($45 million), intending that the IAP will serve as a central marketplace to finance small and medium-sized businesses. Under the scheme, announced as part of the 2015 budget, Islamic banks would vet businesses seeking funds, provide a secondary market for investors and in some cases underwrite the equity transactions. With elements of crowd funding and microfinancing, the IAP is expected to raise the profile of Islamic banks as investment houses.

Malaysia, which is the second largest takaful market in terms of gross takaful contribution, is forecasted to hit US$3.024 billion (RM10.1 billion) in 2014 from US$2.436 billion in 2013. Bank Negara's target is to achieve a penetration rate of takaful of 75% by 2020, from currently 15%. Meanwhile, the local takaful industry is expected to see increased merger and acquisition activities between now and the end of next year, with the introduction of the Islamic Financial Services Act (IFSA). Malaysia's takaful industry achieved compounded annual growth rate of 24% over the last five years. Industry estimates indicate that given a conducive economic climate and its young demographics, Malaysia's takaful industry may be able to continue its double-digit growth path.

CIMB Islamic Bank today signed a memorandum of understanding (MoU) with the Global University of Islamic Finance (INCEIF) to build a collaborative framework towards establishing a research centre for Islamic banking studies. CIMB Islamic Bank chief executive officer Badlisyah Abdul Ghani said the bank had allocated RM1.5 million as sponsorship over the three-year collaboration period. He said the MoU also aims to enhance and strengthen Malaysia's position as a globally recognised marketplace for Islamic banking and Islamic finance. INCEIF is the only institute in the world that focuses solely on Islamic finance education and research.

Former finance minister Tun Daim Zainuddin expressed his support for the mega merger of CIMB Group Holdings, RHB Capital Bhd and Malaysia Building Society Bhd, saying when he was in office, he suggested that Malaysia only needs four banks. Banks need a large capital base to compete globally and this could be achieved through mergers, said Daim. Moreover, Daim said that he was confident that the Vision 2020 would be achieved, with proper planning and hard work. However, he said, a high income nation need not necessarily mean a developed nation. In order to become the latter, the country needs to prioritise quality education and technological advancements.

Malaysian Prime Minister Datuk Seri Najib Tun Razak thinks that the maximum potential of the Islamic economy, including finance, banking, industry, waqaf and the insurance takaful, is still not fully realised. However, there are many challenges that need to be addressed: strong support from the political leadership to make things happen; institution building; human capital development; the shortage of expertise in many areas like Islamic finance, standardisation and regulatory framework; syariah experts to make sure your products are syariah-compliant, among others. Regarding SMEs, Malaysia has a masterplan for their development, with the goal to make SMEs achieve about 41 per cent of GDP by 2020.

Malaysia's Prime Minister Najib Razak said that he backed the idea of creating a large stand-alone Islamic bank, in order to develop a global footprint for Islamic finance and position it as an alternative to conventional banking. A proposed merger between Malaysia's CIMB Group Holdings Bhd and two smaller peers would create a sharia-compliant bank with the financial clout and regional scope that has so far been absent in the industry. Such consolidation would be positive for Malaysia's banking sector, although the government will not press for a deal and will leave the decision entirely up to the shareholders, Razak said.

The asset management arm of Malaysia's Malayan Banking Bhd has launched its first U.S. dollar-denominated mutual fund that invests in Islamic bonds. The new fund will invest partly in sukuk issued from Gulf countries. This is rare for Malaysian funds, because there is an abundant supply of local ringgit-denominated sukuk, but demand for dollar-denominated paper has been growing. The fund will initially be available to Malaysian investors only, although the firm plans to distribute the fund overseas as well, Nor' Azamin Salleh, chief executive of Maybank Asset Management Group Bhd, said.

BIMB Holdings Bhd (BHB), which owns Bank Islam Bhd, is still keen to acquire a stake or even have a management control in Bank Syariah Indonesia as part of its expansion plan. Its group managing director and chief executive officer Johan Abdullah said the talks were still at a preliminary stage, and there was still no material development. Due to the regulatory uncertainty in Indonesia, Johan said that the group would engage the Indonesian authorities before making any decision to acquire a stake in the bank. At the firm's EGM, shareholders gave their nod to the proposed dividend reinvestment plan (DRP) that would provide shareholders with the option to elect to reinvest in whole or in part of their cash dividend with the new ordinary shares of RM1 each in BHB.