PETALING JAYA: Bank Muamalat Malaysia Bhd is said to be revisiting the idea of a merger, but this time possibly with a development financial institution (DFI), sources said.
Among the possible candidates are Bank Rakyat Malaysia Bhd and Malaysian Industrial Development Finance Bhd (MIDF), the sources added.
Bank Muamalat and Bank Islam Malaysia Bhd – ultimately owned by Lembaga Tabung Haji – are the only two standalone Islamic banks in the country licensed by Bank Negara.
DFIs, meanwhile, are specialised financial institutions established by the Government with the specific mandate to develop and promote key sectors that are considered of strategic importance.
DFIs include Bank Simpanan Nasional, Export-Import Bank of Malaysia Bhd, Small Medium Enterprise Development Bank Malaysia Bhd or SME Bank and Bank Pembangunan Malaysia Bhd as well as Bank Rakyat and MIDF.
To recap, the shareholders of Bank Muamalat had been in negotiations with Affin Holdings Bhd, but talks between the parties were called off at end-March.
It was reported that Affin had sought to acquire a portion of DRB-Hicom Bhd’s 70% stake in Bank Muamalat, but the deal fell through due to pricing issues. Talks between the parties had commenced in August last year. At that time, Affin had said that it expected to conclude the talks by the end of 2012.
DRB-Hicom, whose interests vary from ports to property development, had acquired the 70% block in Bank Muamalat in 2008 on the condition that it eventually reduced this to 40%.
It is learnt that Affin was looking to buy 30% of Bank Muamalat from DRB-Hicom.
Khazanah Nasional Bhd owns the remaining 30% of Bank Muamalat.
Affin’s withdrawal from the talks was seen as putting DRB-Hicom in a tight spot, given that it has to pare down its stake in accordance with Bank Negara regulations.
Industry players have said that the idea of a merger between Bank Muamalat and Bank Rakyat is an attractive proposition, given that both are Islamic concerns, with Bank Rakyat being the country’s largest Islamic cooperative bank.
Bank Rakyat, according to sources, is believed to have ambitions to grow its commercial banking segment and a clear path to this would be via a merger with an Islamic bank.
Industry observers have also noted that it has always been the aspiration of the central bank to create a mega Malaysian Islamic bank, which would cement the country’s status as the world’s largest sukuk market and hub for Islamic finance.
Bank Muamalat has had a tough time courting suitors over the past few years, having failed to strike a merger deal with Bank Islam Malaysia in 2011 and Bahrain-based Islamic lender Al Baraka Banking Group prior to that.
On the positive side, Bank Muamalat has worked to clean up its books and improve its returns over the last few years.
For the financial year (FY) ended March 31, 2013, Bank Muamalat posted a record pre-tax profit of RM236mil, with revenue rising close to 12% to nearly RM1bil. Its asset size stood at RM21.07bil.
The bank began operations in October 1999, with its combined assets and liabilities being brought over from the Islamic banking windows of the-then Bank Bumiputra Malaysia Bhd, Bank of Commerce (M) Bhd and BBMB Kewangan Bhd.
Bank Rakyat, meanwhile, has been enjoying good profitable growth over the years, breaching the RM1bil profitability mark in 2008. For FY2011, it made a profit before tax and zakat of RM2.02bil, with the bulk of its financing income coming from consumer banking.
For the first three months to March 31, 2013, its profit before tax and zakat was RM539.52mil.
(The Star Online / 20 Aug 2013)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com
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