Malaysia en-route to establishing world’s first Islamic megabank

66 days to go Friday 11th July 2014 Malaysia en-route to establishing world’s first Islamic megabank Daily Cover MALAYSIA: Malaysia’s industry heavyweights CIMB Group, RHB Capital and Malaysia Building Society (MBSB) have thrown their hats into the ring after receiving regulatory approval from the central bank yesterday to commence discussions on merging the businesses of both RHB and CIMB as well as creating an enlarged Islamic banking franchise with MBSB. Following the consent, all three parties have entered into a 90-day exclusivity agreement to negotiate and finalize pricing, structure, and other relevant terms and conditions for a proposed merger of the three entities and the creation of a mega Islamic bank. “The opportunity to be a part of a mega Islamic bank is exciting for us and we want to take this forward,” affirmed Ahmad Zaini Othman, the president and CEO of MBSB. Malaysia has long mulled the prospects of setting up an Islamic megabank notably since June 2012. Speculations included: the government-owned oil firm Petronas and state pension fund Kumpulan Wang Persaraan to fund the establishment of a Malaysian Islamic megabank; and DRB-Hicom (who owns a 70% stake in Bank Muamalat Malaysia) to create a Shariah compliant megabank via a merger between Bank Muamalat and Affin Holdings. Market players have indicated that the formation of a mega Islamic bank could be a catalyst to propel the industry forward. It would assist in establishing a benchmark for the industry by focusing on best regional and global practices and product development as well as complement a multilateral entity such as the IDB with regards to cross-border transactions. According to local reports, the corporate exercise would result in a merged entity with assets of approximately RM597 billion (US$188.04 billion) and a market capitalization of more than RM90 billion (US$28.34 billion), assuming the deal is concluded at about 1.70 to 1.75 times book value. “There is a prima facie case for a value-creating merger between the three entities and we want to get into detailed discussions to validate it,” added Nazir Razak, the group CEO of CIMB Group. Countries such as Indonesia, Qatar and Turkey have similarly explored the possibility of an Islamic megabank. Should the tripartite discussions fall in place, the world’s first Islamic megabank could be established in Malaysia, the leading global Islamic financial hub. Today’s IFN Alerts AUSTRALIA: Quordoba Investment Management launches Australia's first wholesale and retail Shariah compliant managed investment scheme in direct residential property development MALAYSIA: IILM to auction US$860 million short-term Sukuk next week TUNISIA: Government of Tunisia looks to raise up to TND300 million (US$175.87 million) via Sukuk before the end of 2014 PHILIPPINES: Sukuk issuance for the Philippines will come before the end of 2016, according to treasurer MALAYSIA: Societe Generale to issue RM1 billion (US$315.06 million) Sukuk on the 15th July, according to IdealRatings PAKISTAN: Engro to issue first and second tranches of Sukuk program on the 15th July 2014 INDONESIA: Bank Internasional Indonesia's IDR300 billion (US$25.26 million) Sukuk to enter market mid-July MALAYSIA: Bank Negara Malaysia reveals Sukuk issuance plan for second half of July INDONESIA: Indonesian government picks arrangers for US$1 billion global Sukuk slated for after Eid UAE: Dubai Financial Market and Abu Dhabi Securities Exchange's plan to merge reaches deadlock, shelved for the foreseeable future, according to report BAHRAIN: Bahrain Association of Banks releases retail banking handbook covering Islamic and conventional sectors GLOBAL: Qatar Holding sells 5% of its stake in London Stock Exchange for GBP$260.1 million (US$445.49 million) GLOBAL: UAE opens consulate in Toronto to strengthen investment and trade opportunities with Canada MALAYSIA: Allianz Malaysia appoints Zakri Mohd Khir as CEO and country manager for Malaysia Latest Roundtables June 2014 May 2014 Dubai Islamic Economic Roundtable Series 2014-2 Dubai Islamic Economic Roundtable Series 2014-1 Events IFN Global Forum 2014 15th - 16th September 2014 by REDmoney events IFN Kuwait Forum 2014 29th September 2014 by REDmoney events IFN Sri Lanka Forum 2014 13th October 2014 by REDmoney events IFN Africa Forum 2014 4th November 2014 by REDmoney events IFN Turkey Forum 2014 6th November 2014 by REDmoney events IFN Saudi Arabia Forum 2014 17th November 2014 by REDmoney events IFN Egypt Forum 2014 1st December 2014 by REDmoney events Training Advanced Sukuk & Islamic Securitization 19th - 21st August 2014 (Istanbul) by Islamic Finance training Structuring Islamic Retail Banking Products 25th - 27th August 2014 (Muscat) by Islamic Finance training Structuring Corporate Banking Solutions 8th - 10th September 2014 (Dubai) by Islamic Finance training Islamic Treasury and Risk Management Products 22nd - 24th September 2014 (Kuala Lumpur) by Islamic Finance training Islamic Fund and Asset Management 25th - 26th September 2014 (Kuala Lumpur) by Islamic Finance training Advanced Sukuk & Islamic Securitization 10th - 12th November 2014 (Kuala Lumpur) by Islamic Finance training Advanced Sukuk & Islamic Securitization 8th - 10th December 2014 (Dubai) by Islamic Finance training © Copyright policy: No part of IslamicFinancenews.com may be reproduced in any form by any means, electronic or mechanical (including photocopying, recording or information storage and retrieval) without permission in writing from the publisher. 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