Qatar Islamic Bank (QIB), which owns 70% of Kuala Lumpur-based Asian Finance Bank (AFB), is exploring opportunities with a few local parties in Indonesia in a move to increase its presence in South-East Asia.
AFB chief executive officer Datuk Mohamed Azahari Kamil said the Islamic bank, through its representative office in Indonesia, has identified several candidates on behalf of QIB for that purpose.
However, he said, the right candidate for a merger or acquistion has not been finalised to realise the bank's expansion plan in the region. The right candidate, among other criteria, must be a complete Shariah-compliant bank. QIB is the Gulf state's biggest lender which complies with Islamic banking principles.
"We are exploring with potential candidates on behalf of QIB through our representative office in Jakarta. We will conduct the due diligence and then make recommendations to QIB if the fundamentals are right," he told The Malaysian Reserve in recent interview.
One Indonesian Islamic banking source told The Malaysian Reserve that AFB is looking at buying a bank and would later convert it to an Islamic bank.
When met recently in Kuala Lumpur, Bank Indonesia director Mulya E Siregar said to attract international investors and players in the Islamic banking industry, the Indonesian regulator is committed to create a conducive environment to attract new players, promoting strategic alliances with other institutions to improve reach and outreach of Islamic banking services, both domestic and international.
On the search for a partner, Mohamed Azahari said there is no specific target period for the bank to find the suitable candidate and it is an ongoing process. He said the merger or acquisition that would be undertaken by QIB will add value for the bank in Indonesia and will bridge the business relationship between the country and the Middle East.
"We want to add more value to the bank that we want to acquire in Indonesia. We believe we can do that through this strategic collaboration.
"Indonesia is the market that we are looking at to increase our presence in the region. AFB is suitable to supervise and coordinate the operations in Indonesia because of its presence in Kuala Lumpur," he said.
Mohamed Azahari also said AFB's Islamic banking business in Indonesia has been growing encouragingly since its representative office was set up in Jakarta early 2008. "Business has been good. We see a great potential growth in Indonesia with about 200 million Muslim population," Mohamed Azahari added.
He said the role of AFB representative office in Indonesia is to identify business opportunities in the country and the credit assessment process and funding is provided by AFB in Kuala Lumpur. "There are many Malaysian companies with projects in Indonesia. We support them. We are competitive in terms of pricing and structure," he said.
(This story, written by Dalila Abu Bakar, appeared in The Malaysian Reserve on August 9, 2010. 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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