Monday, February 23, 2009

BIMB denies Bank Islam-Maybank Islamic merger talks

By Alfean Hardy
BIMB Holdings Bhd has categorically denied that it is in talks with Malayan Banking Bhd (Maybank) over a potential merger between its 51%-owned subsidiary, Bank Islam Malaysia Bhd (Bank Islam) and Maybank's Islamic banking unit, Maybank Islamic Bank Bhd.
Reports in the local media over the past couple of days have hinted that a possible merger, which would have created the largest Shariah bank in the region, was in the offing.
In a brief statement issued yesterday, BIMB said that it was not in discussion with Maybank over a potential merger between the two Islamic banks, which are the market leaders in the local Islamic banking sector.
"Although BIMB is open to considering potential strategic partnerships for Bank Islam to strengthen its Islamic banking business and market share, any steps to be taken would firstly require the relevant regulatory approvals," it added.
The bank has made no secret that it was looking for strategic partnerships or mergers.
On Tuesday, a newswire reported that several local Islamic bankers had said that Maybank's Islamic subsidiary wanted to take up stakes in Malaysia's second largest Islamic bank and that Dubai Group's Dubai Islamic Investment Group, which holds a 40% stake in Bank Islam, was keen to sell its stake to Maybank Islamic.
A Maybank spokesman was reported to have said the group was not currently in talks with the Dubai Group as had been speculated. Dubai Group, when approached, said it was a longterm strategic investor in Bank Islam.
"We are proud to be associated with the bank's impressive turnaround over the past two years and are confident of its potential to grow further. "We believe that Bank Islam is well positioned to capitalise on the opportunities presented by the rapid growth of Islamic finance," it added.
Another report in a local daily, citing sources, said the proposed merger had been put on hold at central bank level. It said Bank Negara Malaysia was keen on the idea but had requested both parties to take more time to study their capital base as well as to put their respective houses in order before considering any merger.
The report said, if the merger gets the green light, a special entity would be created to house the two parties, the Bank Islam brand name would likely be retained and that Bank Islam managing director Datuk Zukri Samat, who has been seen as instrumental in Bank Islam's turnaround, would be named the managing director of the new entity.
The report also said the Dubai Group would be asked to sell its stake in Bank Islam to Maybank Islamic and, in return, would be offered an Islamic banking licence, which would allow it to start its own local Shariah-compliant banking operations.

(This story appeared in The Malaysian Reserve on Feb 20, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

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