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Waqf (Wakaf) is the missing piece in Malaysia's Islamic financial system despite the country being the market leader with various sophisticated products and services. According to CIMB Islamic Bank chief executive officer Badlisyah Abd Ghani, waqf in a commercial manner is missing in the market today. Badlisyah said to have waqf in the financial market, there is a need for a conducive legal framework that will allow it for its incorporation in an effective manner.

Malaysia's Shariah-compliant banks should be roped in to manage the country's 1.2 billion ringgit ($375 million) worth of properties held as Islamic endowments. Prime Minister Najib Razak announced this month that the Malaysian Wakaf Foundation will be turned into a corporate entity to derive more value from assets held by the trust. The move to open wakaf (endorsement) management to the private sector may boost business for Malaysia's Islamic banks towards growing their share of the country's total banking assets to 40 percent by 2020 from 24.1 percent presently. The Malaysian Wakaf Foundation will meet the government's Economic Planning Unit this month to finalize its immediate plans

BIMB Holdings Bhd announced it has notified Bank Negara Malaysia that the security for its proposed sukuk will only comprise the legal assignment over the proceeds from the exercise of its proposed warrants. It includes the legal assignment and charge over a sinking fund account into which all proceeds from the exercise of the warrants will be deposited. The exchange has approved the listing of new shares, warrants and rights in relation to its proposed purchase of the remaining 49% stake in Bank Islam.

Malaysia's two biggest state-owned pension funds plan to boost holdings of dollar sukuk.
It is said that their increasing presence in the global arena will help strengthen Malaysia's position as a global Islamic hub and enhance the country's visibility. It will also encourage more local and international issuers to sell dollar sukuk in Kuala Lumpur and around the world.

The $490 million short-term sukuk program issued by the International Liquidity Management Corporation is an important stage in the evolution of Sukuk product, according to Abdulwahab Al-Roshood, Kuwait Treasury General Manager at Kuwait Finance House (KFH). The corporation has recently issued the first issuance for 3 months with the participation of 8 gulf and foreign banks including KFH. The sukuk issued by the corporation enjoys the privilege of being short term, rated as the short- term highest credit rating A-1 by the international Standard and Poor's. Al-Roshood expressed his confidence that KFH 's participation of the corporation's businesses since establishment will add value to its efforts and its role in sukuk market.

Telekom Malaysia will issue a sukuk, of up to 3 billion ringgit ($907.72 million) in nominal value to fund its working capital. Telekom, in which the Malaysian government owns a 68.6 percent stake, is supported by its dominance in the fixed-lined telephone sector and the nation's low penetration rate of 30 percent for household broadband services, said RAM Ratings.

The Securities Commission (SC) aims to position Malaysia as an Islamic wealth management centre, a target that is highly feasible because of the country's high savings rate. Steps are being taken to create a certain number of intermediaries in the area. As of July 2013, there were 19 licensed Islamic fund management companies in Malaysia. The country's assets under management of Islamic funds are expected to hit RM322 billion by 2020 from RM80 billion end-2012. Generating broader approach with regional countries can help Malaysia to continue innovating and expanding the Islamic market place.

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.

Ibrahim Hassan will assume his post as the new CEO and managing director of the RHB Banking Group's Islamic banking arm from Sept 2, 2013. He will be responsible for overseeing the group's overall Islamic banking business and operations including driving its revenue, expanding the group's product range and customer portfolio growth across local and international boundaries. Prior to this, Ibrahim was the president director at PT Bank Maybank Syariah Indonesia. Ibrahim's appointment leaves the RHB Banking Group with only one vacancy – the top post at RHB Bank Bhd. RHBCap group managing director Kellee Kam is currently assuming the responsibilities of RHB Bank managing director in addition to his role at the group level. Earlier this month, RHB Investment Bank Bhd officer-in-charge Mike Chan Cheong Yuen was promoted to be its managing director and CEO.

The $490 million, three-month Sukuk, issued by the International Islamic Liquidity Management Corp (IILM), was auctioned to seven primary dealers from Asia, theMiddle East and Europe. However, this will only be a major breakthrough for Islamic finance if IILM sukuk are actively traded by Islamic banks, rather than held to maturity. It is not clear whether the existing primary dealer network - which includes only two purely Islamic financial institutions - is broad enough to engineer trade in IILM sukuk across major markets. The prevalence of conventional banks in the dealer group suggests the IILM may have decided to choose the largest possible primary dealers in order to maximise distribution of the sukuk. But it also raises the possibility that the instrument could be bought by conventional institutions rather than the Islamic banks which most need it.

The Malaysia-based International Islamic Liquidity Management Corp (IILM) has issued its USD 490 million debut sukuk. The three-month Islamic bonds, denominated in US dollars, were fully subscribed. The IILM sukuk received a high A-1 credit rating from Standard & Poor’s, and the IILM has said it plans to increase its issuance eventually to as much as USD 3 billion. The sukuk, priced at 30 basis points over the London Interbank Offered Rate, was auctioned off to seven institutions from around the world. These primary dealers will now be responsible for selling the sukuk on to other Islamic banks and institutions in an effort to create an active market in the instruments.

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.

Bank Muamalat Malaysia Bhd is said to be revisiting the idea of a merger, this time with a development financial institution (DFI). Among the possible candidates are Bank Rakyat Malaysia Bhd and Malaysian Industrial Development Finance Bhd (MIDF). DFIs are specialised financial institutions established by the Government with the specific mandate to develop and promote key sectors that are considered of strategic importance. Industry players say the idea of a merger between Bank Muamalat and Bank Rakyat is an attractive proposition as both are Islamic concerns, with Bank Rakyat being the country’s largest Islamic cooperative bank.For the financial year (FY) ended March 31, 2013, Bank Muamalat posted a record pre-tax profit of RM236mil. Bank Rakyat, meanwhile, has been enjoying profitable growth over the years.

Takaful Ikhlas will focus on group insurance schemes in efforts to educate more Malay clients on the importance of Islamic insurance policy and protection coverage. President and Chief Executive Officer Ab Latiff Abu Bakar said the Islamic insurance penetration rate by the Malays in the country was only 12 per cent. Of the 88 per cent of the Malay market for Islamic insurance protection which have not been penetrated, the company is aiming to secure up to 10 per cent next year, driven by would-be-launched new group schemes and existing group insurance policies, he said. Takaful Ikhlas is targeting RM10 million returns in the next five years from its group insurance schemes. Ab Latiff said Takaful Ikhlas was also confident of netting RM2 million worth of sales this year from RM1.5 million last year, aided by the appointment of more agents, up to 50, and improved marketing strategies.

Wong & Partners is advising Malaysian investment company BIMB Holdings on its proposed $885 million takeover of Bank Islam. The deal is subject to shareholder and regulatory approvals, and will be financed by a $1.8 billion capital raise.
Kuala Lumpur partners Munir Abdul Aziz and Wong Sue Wan are advising BIMB Holdings on the transaction, as well as the rights issue. Kuala Lumpur partner Mark Lim will act for Bank Islam as the lead arranger on the bond issuance. Zaid Ibrahim & Co. Kuala Lumpur partner Wan Marzimin and Zul Rafique & Partners Kuala Lumpur partner Lukman Sheriff Alias are acting as counsel to Dubai Financial Group and Lembaga Tabung Haji, respectively.

Bank Muamalat Malaysia has announced the rolling out of the country’s first-ever Shariah-compliant solar photovoltaic (PV) financing scheme valued between RM20 million and RM30 million within the next 2-3 years. Deputy CEO Musa Abdul Malek said that for the first year, the bank may disburse from RM10 million to RM15 million of the funds to 1,000 homeowners, who will be fitting their homes with solar PV systems, which will be grid connected and reap from the country’s solar PV Feed-in-Tariff (FiT) system. However, he said the Smart Green Mortgage Solar PV FiT Plan with its design based on the murabahah structure, is a mortgage plan that does not a have a high-end margin for the bank with a mere 1% yield. The Bank Muamalat package for solar PV is the second in the Malaysian market after Alliance Bank announced its solar financing package in June.

Dubai Financial Group (DFG) has agreed to divest of its 30.5% stake in Bank Islam to BIMB Holdings in Malaysia, in a deal worth $550m. BIMB Holdings currently owns 49% stake of Bank Islam and the recent acquisition, which completed on 31 July 2013, will enable it to strengthen its banking business in the country. Bank Islam manages a branch network of more than 127 offices. Following DFG's acquisition, the total assets of the lender rose from MYR14.6bn ($ 4.5bn) in 2006 to MYR37.4bn ($11.5bn) by the end of 2012. In June this year, the company divested its credit card operation The Dubai First to Abu Dhabi based First Gulf Bank (FGB) in a deal reached at $164m.

Malaysia-based International Islamic Liquidity Management Corp (IILM) will issue its long-awaited sukuk programme worth $490 million (RM1.6 million) this month, offering tenors of three months. The dollar-denominated sukuk programme, rated "A-1" by S&P, is backed by sovereign assets from member countries and will carry maturities of up to one year. IILM delayed its maiden issue several times and replaced its chief executive in October last year. It plans to raise the programme to as much as US$3 billion, aided by a multi-jurisdictional network of primary dealers that will ensure a secondary market, which includes Albaraka Turk and Standard Chartered as primary dealers.

MAA Group will finally get to proceed with plans to buy new businesses after reaching a settlement agreement with Zurich Insurance Co. Under the settlement, Zurich has agreed to pay MAA Group RM103.43 million on top of the RM344 million acquisition price for MAA Group's interest in MAA Assurance Alliance and its subsidiaries. The RM103.43 million amount is subject to the deduction of the Senai Desaru and Domayne bonds transfer price and Prima Avenue Klang property holdback amount of RM3 million, such that the net amount payable by Zurich into the escrow account is RM78.83 million. However, Zurich will instruct and withhold the RM3 million until delivery of the individual strata titles for Block A of Prima Avenue Klang within three years.

Maybank Islamic Bhd, the Islamic banking arm of Malayan Banking Bhd (Maybank), aims to expand to all Asean member countries that Maybank has a presence in. According to its CEO Muzaffar Hisham, the bank intends to continue its regional expansion to other Asean nations after focusing on Singapore and Indonesia as part of its internationalisation initiative. Muzaffar said the bank has invested a lot of time and effort in the expansion opportunities, which were in line with the aspiration of Bank Negara Malaysia to internationalise Islamic finance. The bank grew by an average of 25% per year, held 30% market share locally and contributed 30% to the loans portfolio of Maybank domestically. Up to the first quarter of this year, Maybank Islamic has 4 million depositors with a deposit value of RM70 billion.