Kuwait Finance House Malaysia mulls restructuring (By IFN)

Kuwait Finance House Malaysia mulls restructuring

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MALAYSIA: Talk on restructuring has arisen as Kuwait Finance House Malaysia prepares itself for the election of a new CEO, after confirming the departure of industry maven Jamelah Jamaluddin from the helm. However, sources have alluded that Jamelah will remain with the bank as head of its new investment banking subsidiary. According to those close to the bank, it had always been the intention of Kuwait Finance House to grow its investment banking division; upon its expansion into Malaysia in 2005. “That has been the strategy of its ‘Transformation Plan’,” said a source. Kuwait Finance House Malaysia, which was at one time on a long losing streak after making losses for three consecutive years between 2009 to 2011, had slowly begun to shift its focus to investments after the re-election of Jamelah as its CEO in 2010. The bank, despite having healthy capital adequacy requirements—higher than the industry average, had to make major loss provisions in 2011 to compensate for bad loans that were backed by a portfolio of assets which were underperforming at the time. However, the bank’s decision to become an active purveyor in the Malaysian property and real estate development market marked a significant turning point for the entity. Its US$135 million investment in the RM3 billion (US$963.1 million) shopping complex project in Kuala Lumpur, Pavillion, in which it has a 49% stake, saw the bank make internal returns of 25%. Its other investement, Sunway South Quay which is 20% owned by the bank also made “handsome returns” according to sources. It is anticipated that Abdul Hamidy Abdul Hafiz, the chairman of state-owned financial guarantee insurer Danajamin Nasional will take over from Jamelah as CEO of Kuwait Finance House Malaysia.