IslamicFinance.de

MBSB Bank, the result of a merger between Malaysia Building Society and Asian Finance Bank, starts afresh as a full-fledged Islamic bank. According to group CEO Datuk Seri Ahmad Zaini Othman, the bank intends to differentiate itself in the area of transactional banking, as well as in digital capabilities. One of the key targets in MBSB Bank’s three-year business plan is to have fee-based income account for at least 25% of its total income by the end of 2020. The bank hopes that its approach towards customers will also set it apart from other lenders. MBSB Bank is starting out with total assets of RM43.7 billion, making it the second largest standalone Islamic bank after Bank Islam Malaysia (RM57.7 billion). Personal financing constitutes the biggest portion of the bank's gross financing and is extended mainly to civil servants. MBSB plans to make a stronger push in the industrial hire purchase segment, which involves SME financing. Zaini plans to offer a lot more products and services for SMEs, especially in the area of current accounts.

#Malaysia Building Society's (MBSB) move to strengthen its presence in Islamic banking is in line with majority shareholder Employees Provident Fund’s (EPF) endeavour. MBSB president Datuk Ahmad Zaini Othman said being a prominent Islamic player would help the firm’s growth plan. MBSB aspires to graduate from a non-lender into a full-fledged Islamic bank to increase its competitiveness. For the first six months ended June, MBSB’s net profit dropped 53.4% to RM97.8 million, despite an 11.6% jump in revenue to RM1.6 billion. The first-half results were below estimates, with operating income declining 1.8% as management continued to focus on corporate loans portfolio in place of the higher-yielding personal financing portfolio.

The proposed merger of Malaysia Building Society Bhd (MBSB) and Bank Muamalat Malaysia Bhd, to create the country’s biggest standalone Islamic bank has fallen through. MBSB said on Tuesday that after a series of discussions and negotiations, the financial institution and the shareholders of Bank Muamalat -- DRB-Hicom Bhd and Khazanah Nasional Bhd – have not been able to reach an agreement on the terms and conditions of the proposed merger. Accordingly, the parties have mutually agreed to end all discussions and not proceed with the proposed merger. The deadline for the proposed merger between MBSB and Bank Muamalat was on Tuesday.

In a statement to Bursa Malaysia on 18 January, Malaysia Building Society Berhad reported that, ‘on behalf of the Board of Directors of MBSB, AmInvestment Bank Berhad wishes to announce that Bank Negara Malaysia (BNM) has vide its letter dated 15 January 2016 (which was received today) stated that it has no objection to MBSB’s application for the extension of time until 2 February 2016 to conclude the negotiations with DRB and Khazanah’ [shareholders in Bank Muamalat Malaysia] for the proposed merger and to submit the formal application to BNM.

Khazanah Nasional Bhd may sell its stake in Bank Muamalat Malaysia Bhd only after the latter merged with Malaysia Building Society Bhd (MBSB) to form the country's largest full-fledged Islamic bank. Reiterating that it is not taking the lead in negotiations, Khazanah managing director Tan Sri Azman Mokhtar said the country's strategic investment fund is not particular about the structure of the merger, provided the valuations are fair. It has been reported that the merger would be effected via a share swap. There have been various scenarios bandied about on Khazanah's preferred outcome for its 30% stake in Bank Muamalat. DRB-Hicom Bhd holds the remaining 70% of Bank Muamalat.

State investment fund Khazanah Nasional Bhd is expected to dispose off its entire 30 per cent interest in Bank Muamalat to major shareholder DRB-Hicom Bhd ahead of the proposed merger between Bank Muamalat and Malaysia Building Society Bhd (MBSB) materialises. There is no point holding on to the stake since its holdings would diminish in the merged entity. Moreover, it would not be a problem for DRB-Hicom which already owns 70 per cent interest in Bank Muamalat to purchase Khazanah’s interest. Khazanah managing director Azman Mokhtar had told reporters that it would wait for the outcome of the merger talks before deciding what to do with its stake.

Khazanah Nasional Bhd plans to divest its entire 30% stake in Bank Muamalat Malaysia Bhd in the proposed merger between the lender and Malaysia Building Society Bhd (MBSB), sources say. That it plans to sell the entire 30% stake isn’t exactly surprising considering that Khazanah has long made it known that it considers the stake a “non-core holding”, which meant that it was open to letting it go at the right price. Another reason for the planned divestment is that Bank Negara Malaysia is not keen on the government investment arm owning major stakes in more than one bank. It already owns 29.34% in CIMB Group Holdings Bhd.

Khazanah Nasional Bhd is "not in a rush" to sell its 30% stake in Bank Muamalat Malaysia Bhd, under the proposed merger with Malaysia Building Society Bhd (MBSB). Khazanah's managing director Tan Sri Azman Mokhtar said the Malaysian state-owned investment arm's decision was incumbent upon the negotiated value for its Bank Muamalat stake. He cited the right price and the right configuration as requirements for a sale. DRB-Hicom Bhd holds the balance 70% stake in Bank Muamalat. According to Azman, as Khazanah is only a 30% shareholder in Bank Muamalat, Khazanah is not taking the lead in the merger talks. Khazanah will make a decision based on whatever they decide, he added.

Malaysia Building Society's (MBSB) planned merger with Bank Muamalat Malaysia is expected to create a financial services entity with a collective asset size of some RM60 billion. Affin Hwang Investment Bankwrote in a note today that MBSB and Bank Muamalat's assets were valued at RM41 billion and RM22 billion respectively. Nevertheless, there could be potential write-offs of the loan book subsequent to due diligence exercises, which is likely to follow suit. However, Affin Hwang also said they were not too optimistic about the merger, as previously there have been other merger discussions between Bank Muamalat and other parties that were unsuccessful.

Malaysia Building Society Bhd (MBSB) is on track to obtaining a full-fledged Islamic banking licence, that will come together through a merger with Bank Muamalat Malaysia Bhd. Plans were being laid out to realise MBSB’s goal to get a full-fledged Islamic banking licence. This comes seven months after news-grabbing three-way merger between MBSB, CIMB Group Holdings Bhd and RHB Capital Bhd fell through in January. In May this year, MBSB was reportedly eyeing Kuwait Finance House (M) Bhd as an option for a merger exercise. One of MBSB’s setbacks as a non-conventional bank is its inability to tap low-cost funds from the money market that are accessible to conventional banks.

Malaysia Building Society Bhd (MBSB) has not initiated any new merger discussions with any organisation after the deal with CIMB Group Holdings Bhd and RHB Capital Bhd fell through. President and chief executive officer Ahmad Zaini Othman reaffirmed that MBSB has not received the green light from its shareholders to talk to any financial institution on a potential merger and acquisition. Meanwhile, Ahmad Zaini signed a Memorandum of Understanding (MoU) on behalf of MBSB with Credit and Debt Management Agency (AKPK). The MoU will enable MBSB to participate in AKPK’s debt management programme, which will see the latter extending its services.

A plan is being floated on a “marriage” between Malaysia Building Society Bhd (MBSB) and Bank Islam Malaysia Bhd. Sources say the idea of a merger between the two is being mooted at the shareholder level of both companies, namely the Employees Provident Fund (EPF) and Lembaga Tabung Haji (LTH). A common factor the two companies have is Tan Sri Samsudin Osman, who is chairman of EPF and BIMB Holdings Bhd – Bank Islam’s listed parent company. BIMB wholly owns Bank Islam, which is its main income generator. Bankers say that if a merger is to take place, the EPF would be able to vote, unlike the situation in the failed merger with CIMB and RHB.

Weak economic conditions scuppered plans for a tie-up of Malaysia’s CIMB Group Holdings Bhd with RHB Capital Bhd and Malaysia Building Society Bhd (MBSB). It would have created Southeast Asia’s fourth-largest bank with assets of US$190 billion (RM692.63 billion). MBSB, a non-bank lender and the smallest of the three firms, is now studying a plan to convert itself into a full-fledged Islamic lender. It said last week it would convert existing conventional financial products into Islamic ones while introducing new ones to close the gap with competitors. Meanwhile, both CIMB and RHB Capital have established, domestically focused, Islamic units.

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.

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.

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.

The creation of a mega Islamic bank will push Malaysian banks to look beyond local shores should the proposed merger of CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd materialise. While the local market for Islamic finance remains lucrative, banks should not be content to remain in the local market as a market downturn could cause a reversal of fortunes. Low risk tolerance is why local banks are not expanding their reach overseas. Some attempts thus far to go abroad have been on a partnership basis contributing knowledge and technical expertise. In addition, local banks’ issuance of Islamic sukuk in the international arena is still low relative to international banks.

The creation of a mega Islamic bank must fulfill the objectives of being able to undertake international business and facilitate cross border financial flows, said Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz. She said that such a mega bank must also be able to support international trade and cross border investment activity. She was responding to a question about the license for the proposed mega Islamic bank as a result of a merger between CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd. Dr Zeti said Bank Negara wanted to see the internationalisation and enhancement of Malaysia’s financial and economic connectivity with other countries.

Fitch Ratings has warned that a merger plan by Malaysia’s second largest bank CIMB Group with RHB Capital Bhd and Malaysia Building Society Bhd (MBSB) to create the country’s biggest lender is fraught with risks. Fitch said the merger could weaken capital buffers for CIMB if not funded by sufficient new equity, adding that any move to rationalise branches and staff could be “politically unpalatable”. Furthermore, weakening credit growth and asset-quality pressures in the overall banking system will not make the process any easier. On the other hand, a successful merger would provide a stronger domestic platform from which CIMB’s offshore aspirations could continue to expand.

CIMB Group Holdings Bhd, RHB Capital and Malaysia Building Society (MBSB) have received Bank Negara Malaysia's approval to start merger talks which would result in the creation of a mega Islamic bank. They announced in a joint statement on Thursday that under the corporate exercise, the proposal was to merge the businesses of both RHB and CIMB. The corporate exercise included plans to create an enlarged Islamic banking franchise with MBSB. The three parties have entered into a 90-day exclusivity agreement to negotiate and finalise pricing, structure, and other relevant terms and conditions for a proposed merger.