Employees Provident Fund-owned MBSB targets KFH Malaysia for merger

MBSB chairman Abdul Halim Ali and CEO Ahmad Zaini Othman, image taken from website.

Malaysia Building Society Bhd (MBSB) is understood to be eyeing Kuwait Finance House (M) Bhd (KFH Malaysia) as an option for a merger exercise, according to sources who have been cited in local media.

StarBiz quoted banking sources noting that MBSB and its major shareholder, the Employees Provident Fund (EPF), are looking at the foreign Islamic bank from “afar” and currently studying its numbers.

MBSB, which 80% of its assets are Islamic, is planning a transition into a full-fledged Islamic bank.

“MBSB is looking at KFH Malaysia as one option as the deal came to it for consideration. There are no formal talks between the two financial institutions yet,” the source said.

KFH Malaysia is wholly-owned by Kuwait-based Kuwait Finance House (KFH) and is the country’s first and largest foreign Islamic lenders here. Its parent group is the Gulf nations’ biggest Islamic lender.

Yesterday, Reuters reported that KFH may sell some of its investments including KFH Malaysia and has picked Credit Suisse to advise it on the matter. KFH, however, did not provide any details such as a timeline or a potential sale price of the unit.

In an understated announcement last week, KFH Malaysia posted a press release on its website noting the appointment of its new CEO and MD Ahmed S. Al Kharji effective 20 April 2015. The appointment, StarBiz reported last week, could be a precursor to a corporate exercise such as a merger and acquisition (M&A).

“However, other quarters reckon the bank is here to stay and it is unlikely that the Kuwaitis will sell cheap, that is if it does at all. This is because Asia still presents huge potential for Islamic finance and Malaysia is often seen as a springboard for expansion into neighbouring countries,” the local daily reported.

Al Kharji, a Kuwaiti, is KFH Malaysia’s fourth CEO since it began operations 10 years ago, and the second foreign chief to be appointed.

The bank was established in Malaysia in 2005 under the liberalisation of the Islamic banking industry, but has seen the going tough due to fierce competition with local banks.

KFH Malaysia has total assets of MYR10.47 billion as at financial year ended Dec 31, 2014. According to its 2014 annual report, corporate and commercial financing are the major contributors to the bank’s assets portfolio at 69%, while consumer is next at 31% as at the end of last year.

“Industry players said a merger with an Islamic bank was logically in line with MBSB’s aspiration to become a full-fledged Islamic bank. The non-bank lender also aims to double its corporate loan book, from 15% now, by 2020. The retail sector, derived largely from personal financing, forms the bulk of its loan portfolio at 85% currently,” StarBiz reported.

There was an earlier speculation that Bank Islam Malaysia Bhd, the country’s first standalone Islamic bank, was also on MBSB’s radar.

Last year, MBSB was part of a high-profile proposed three-way merger involving CIMB Group Holdings Bhd and RHB Capital Bhd but the deal fell through in January.

Also read:

Malaysia’s MBSB looks at possible merger during next two years

CIMB-RHB-MBSB: mega merger aborted?

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

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  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.