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Islamic banking gone mainstream
Malaysia’s prime minister Abdullah Ahmad Badawi touted Islamic financing as part of the country’s mainstream financial system and was confident of its potential to generate the country’s economic growth.
Islamic banking cornered 12.2% of the domestic financial market with assets totaling RM133 billion (US$38.57 billion), while holding 6.1% of the insurance market with assets worth RM6.9 billion (US$2 billion).
Islamic Payment Switch
Malaysian Haj and Umrah pilarims can now withdraw money Islamically, following a deal between e-Kencana (eKSB), Al Rajhi Bank and ACI Worldwide.
eKSB would implement its payments engine Base24, along with a card management system and smart chip manager to activate its Islamic Payment Switch. The implemented Base 24 system would then authorize and route transactions, allowing eKSB to deliver services through ATMs, kiosks and self-service devices.
Alam Maritim goes Islamic
Alam Maritim Resources (AMRB) raised RM600 million (US$173.87 million) in Islamic securities, jointly arranged by Aseambankers Malaysia and Standard Chartered Bank Malaysia.
The Islamic securities comprised a RM500 million (US$144.89 million) Sukuk Ijarah medium-term notes facility (Sukuk Ijarah MTN facility) and up to RM100 million (US$28.97 million) of Murabahah commercial papers/Murabahah medium-term notes program (MCP/ MMTN program). Aseambankers and StandChart acted as joint principal advisers and joint lead managers for the Islamic securities.
More solutions
Malaysia’s Meridian Diversified tied up with US-based Fiserv and China Systems Corporation to create Islamic financial and banking solutions.
The joint venture was confident of securing sales to a local tier1 bank by the end of the year. The JV would see Meridian providing treasury management expertise, Fiserv handling core banking solutions and China Systems offering trade finance solutions. Preliminary work on the JV began in 2006 when Meridian was appointed as the local distributor for Fiserv and China Systems products.
Malaysia the next oil hub?
China sees Malaysia as the next oil hub, with the building of the US$7 billion Trans-Peninsular Oil Pipeline (TranPen). This would not only mean an influx of oil money, but also of Middle Eastern and western investors.
With recent advents in Islamic financing, including Bank Negara’s and a Saudi Hollandi’s accord on commodity Murabahah, many feel that Middle Eastern and Malaysian banks can capitalize from this arrangement to help realize the proposed oil-structured derivatives.
More depth, please
Mustapa Mohamed, Malaysia’s higher education minister, called for Islamic studies courses in universities to include Islamic banking, law and sciences.
Mustapa urged: “Among the subjects that can be researched are zakat, which can act as a mechanism to develop the people, the efficient development of wakaf properties, Shariah issues and other humanitarian fields.”
Stapled income securities
Telekom Malaysia (TM) closed its exchange offer of RM3 billion (US$869.25 million) in Islamic stapled income securities, converting its existing RM3 billion (US$869.25 million) Tekad Mercu bonds.
Citi Malaysia acted as the deal’s principal adviser and sole lead arranger for the RM2.92 billion (US$846.07 million) Islamic Stapled Income Securities and Exchange Offer.
Khazanah lists Sukuk on DIFX
Khazanah Nasional listed its US$850 million Sukuk on the Dubai International Financial Exchange (DIFX). See Islamic finance news Vol.4 Issue 26 for the Sukuk’s termsheet.
New Al Rajhi branch
Al Rajhi Bank opened its 14th branch in Melaka, bringing the bank closer to hitting its target of 50 branches in Malaysia.
Eyeing license
HSBC Malaysia was optimistic about acquiring a fully fledged Islamic banking license, according to new CEO Irene Dorner. The bank also revealed plans to open another 15 branches to tap the market demand for Islamic finance.
First for ETFs
Malaysia aims to be the first country to list a Shariah compliant exchange-traded fund (ETF). Althought no specific timeframe has been set for such a listing, Malaysia’s deputy finance miniter, Dr Awang Adek Hussin, is confident that the country is ready to take the leap
Second exchange LFX Sukuk listed
The Labuan International Financial Exchange (LFX) listed its second exchangeable Sukuk, with the induction of Khazanah Nasional’s US$850 million Sukuk. To date, the LFX has listed nine Sukuk, totaling US$3.95 billion.
Six banks max, please!
Nazir Razak, CEO of CIMB, called for Bank Negara Malaysia BNM to play a prominent role in boosting mergers of local banks and reducing the size of the market to five or six major players. “We need to get this done before liberalization — otherwise, local players will not be able to withstand such forces.”
TAKAFUL
Awaiting green light
MAA Holdings expected to gain approval from Bank Negara Malaysia to commence negotiations with prospective partners for the sale of its 49% stake in MAA Assurance. The company identified several local and foreign partners.
Cross-border Takaful
Malaysia’s Fortitude Capital was to team up with Kuwait’s Al-Aqeelah to set up a Takaful company in Syria. The joint venture was due to be established by 2008, marking Al-Aqeelah’s first Takaful operation.
MAA optimistic
MAA Takaful was confident of generating RM200 million (US$57.89 million) from its family sector and RM150 million (US$43.42 million) from the general sector come 2008.
In the more immediate future, the company expected to secure RM25 million (US$7.23 million) apiece for its family and general Takaful business this year.
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