MIF Monthly - Malaysia: The International Islamic Financial Center

StanChart School of Trade
Standard Chartered Group (StanChart) intended to expand its staff from 160 to 2,000 by the end of 2007. In tandem with these plans, StanChart Malaysia recently signed a memorandum of understanding with Universiti Teknologi Mara (UiTM) to establish an internship program dubbed “School of Trade”. The bank was set to invest RM1.5 million (US$429,543) in the three-year program.

AmanahRaya’s REIT projection
Awaiting listing, AmanahRaya JMF Asset Management’s REIT was to induct 11 new local properties worth RM700 million (US$200.3 million). The induction was expected to boost AmanahRaya REIT’s net asset value to RM2 billion (US$572.5 million) come 2008.

Citi’s three-pronged plan
Citigroup planned to develop its consumer sector, corporate investment banking and wealth management business to boost its Islamic banking side.

OCBC laubches ELRSI
OCBC Bank launched its first Shariah compliant equity-linked structured investment product. The equity-linked RM Structured Investment (ELRSI) was a Wakalah-based, three-year, close-ended, medium-risk structured investment product. The product is expected to generate optimum returns for customers up to 24% for the entire tenure of the investment, provided the conditions for profit accrual were fulfilled.

SMEs and Islamic Banks
The recently inked partnership between the Credit Guarantee Corporation (CGC) with Islamic financial institutions was set to further mobilize cooperation between small and medium-sized enterprise (SME) and Islamic finance, by providing more access to financing. Islamic financing within the SME sector hit RM10 billion (US$2.86 billion) as at end of 2006, charting a 34% growth, it accounted for 9.6% of total SME loans.

Equal revenue, please
BIMB Holdings aimed for equal revenue contributions from its two major subsidiaries — Bank Islam and Takaful Malaysia and other businesses. It projected this would be achieved by 2012. BIMB currently contributes 85% of BHB’s total revenue, with Takaful Malaysia and other Islamic leasing, investment banking and fund management businesses contributing the remainder.

RealRewards for women
In a bid to increase its deposits to US$14.3 million, Bank Islam Malaysia launched the Pewani RealRewards program. Pewani, the bank’s women’s savings account, expected to double its account holders through this newly launched scheme. Women who opened Pewani savings accounts with a minimum deposit of US$286 and existing customers who maintained an average monthly balance of US$286 would earn reward points that would then be credited into their RealRewards accounts.

Islamic Finance Arbitration Rules
BNM along with the Securities Commission concluded talks on Islamic Finance Arbitration Rules with the Kuala Lumpur Regional Center for Arbitration. The Rules are based primarily on the UNCITRAL Arbitration Rules with modifications made to meet the specificities of Islamic finance, both domestically and internationally.

Issuers and Investors Forum
Islamic Finance Events was to host Malaysian Islamic Finance (MIF) 2007’s Issuers and Investors Forum in August. MIF 2007 will focus on Malaysia’s role as a prominent player in the industry. The forum will also feature key regulators and associations from around the globe as per 2006, drawing on experience and expertise of the industry’s elite.

HSBC’s Islamic finance boost
HSBC Amanah, HSBC Group’s Islamic financial arm, looked to remain a key player in the industry through the heightening of its regional hub’s capabilities. HSBC Amanah’s core Islamic banking team of 30 personnel currently performs all retail functions. The unit planned to increase staff numbers in line with HSBC’s expansion.

RHB latest
With confusion mounting in the Rashid Hussain (RHB) bid, the only constant was KFH’s offer of RM2.16 billion (US$570 million) for a 33% stake in RHB. EON Capital emerged as a new bidder at RM6.33 billion (US$1.81 billion). RHB however, assured bidder EON Capital that its debt repayment plan would not affect EON’s offer.

Al Rajhi begins Malaysian operations
Al Rajhi Bank officially launched its banking operations in Malaysia. It planned to introduce Qard, Musharakah, Bai Bithaman Ajil, Mudarabah and Ijarah to its customers. The bank also wants to fortify ties with the Malaysian government.

KFH’s new plans
Kuwait Finance House Malaysia (KFHM) was to introduce retail finance products across the country this year. Salman Younis, managing director of KFH Malaysia confirmed that the products would be rolled out in phases. This introduction was on the back of KFH’s corporate and investment services provision.

HSBC keeping it fun
HSBC Amanah Takaful considered Takaful talent as its core business mover. In line with its bid to seek out talent, the HSBC group launched several niche programs targeted at capturing the right skills base across its business network. Keith Driver, CEO of HSBC Amanah Takaful, who believes in “keeping it fun”, had a strategy of hiring young employees who are still learning and curious about the insurance industry.

Non-Muslims contribute
Malaysia’s Takaful market was set to dominate a larger portion of the country’s insurance sector, with 2007 set to see an increase in non-Muslim subscribers and new market players. Nasser Yassin, executive secretary of the Malaysian Takaful Association, expected Takaful to enjoy a 9.5% slice of the Malaysian insurance pie, an increase from the current 5.5%, by the end of the year.

No more Mudarabah
Takaful Nasional shifted its operating model from Mudarabah to Wakalah. The transition began with its general Takaful products, followed by family Takaful. The move was to standardize operating models with sister company Mayban Takaful.

SCOR re-Takaful
The Monetary Authority of Singapore authorized SCOR Asia-Pacific to apply to the Labuan Offshore Financial Services Authority (LOFSA) for a license to allow SCOR Asia-Pacific’s non-life branch to expand and underwrite re-Takaful reinsurance contracts.

HSBC-Jerneh Talks
HSBC Insurance Asia began talks with Jerneh Insurance to acquire its non-life insurance portfolio. Valued at US$4.5 million, the portfolio comprised 10,000 motor, medical, employee compensation and public liability insurance policies. The transaction was expected to be completed in 1Q 2007.

Five-bank pact
Mayban Fortis Holdings signed a bancassurance partnership agreement with five unnamed domestic and overseas banks this year to maintain its pole position in the industry. The agreement, which was to incorporate a mixture of Islamic and conventional banks, was expected to produce between five and 10 new bancassurance products in the initial two years.

More flexibility
BNM intended to award greater regulatory flexibility to insurers with strong corporate governance standards and risk management practices. The proposed regulatory regime, which included the new risk-based capital framework, was expected to strengthen incentives for improved risk-management practices of insurance companies.

Takaful for maids?
Takaful Malaysia proposed that the Malaysian government provide insurance coverage for foreign maids. Takaful Malaysia said it would work with a consortium of companies to execute this campaign. Premiums for the plan would fall under the jurisdiction of the Finance Ministry and BNM.