DRB-Hicom sees establishment of Islamic megabank via Bank Muamalat Malaysia-Affin Holdings merger (By IFN)

Friday 21^st September 2012

MALAYSIA: Conglomerate DRB-Hicom, which owns a 70% stake in Bank Muamalat Malaysia, has thrown its hat in the ring for the establishment of an Islamic megabank, following a potential merger between Bank Muamalat and Affin Holdings. Mohd Khamil Jamil, the group managing director of DRB-Hicom, also disclosed that the group is looking to sell 30% of its stake in Bank Muamalat to Affin. The exercise would allow for a merger of Bank Muamalat’s assets with those of Affin Holdings, which owns Affin Islamic Bank. The enlarged entity is then seen to have the capability of expanding abroad, with Mohd Khamil noting that the Malaysian Islamic financial market has reached its saturation point. He also revealed that the Malaysian central bank has instructed DRB-Hicom to seek opportunities for Bank Muamalat to expand beyond Malaysia, with its potential merger with Affin providing an avenue for the Bank Muamalat to expand its capacity and capabilities. He also highlighted Bank Muamalat’s agreement with China’s Bank of Shi Zui Shan aimed at setting up an Islamic bank in the Chinese province of Ningxia by 2014, showing that opportunities for the Malaysian bank to expand abroad do exist. A proposal for the merger between Bank Muamalat and Affin is expected to be sent to the Malaysian central bank by the end of this year, with a final decision on the matter seen by the end of January 2013, Mohd Khamil said.