MIDF, Al Rajhi secure Bank Negara Malaysia approval to initiate merger talks

Saudi Arabia
Skyscrapers stand in the King Abdullah financial district in Riyadh, Saudi Arabia, on Sunday, Jan. 10, 2016. Photographer: Waseem Obaidi/Bloomberg

The central bank of Malaysia (Bank Negara Malaysia) has shown the green light to Malaysian Industrial Development Finance Bhd (MIDF) to proceed with its merger negotiations with Saudi’s Al Rajhi Banking & Investment Corp’s local arm in Malaysia, MIDF said in an announcement on Thursday.

The merger talks between MIDF and its sole shareholder, state strategic investment fund Permodalan Nasional Bhd (PNB), as well as Al Rajhi must be completed in three months from the date of the letter issued by Malaysia’s central bank.

“It should be noted that this should not be construed as implying that a final merger agreement will be reached or that BNM has approved the merger. MIDF will have to obtain prior approval from BNM or the Minister of Finance, with the recommendation of BNM, as the case may be, pursuant to the Islamic Financial Services Act 2013 and the Financial Services Act 2013 before entering into any agreement to effect the proposed merger. “If an agreement is achieved, it will also be subject to various conditions, including all relevant legal requirements and the approval of all regulatory authorities involved, in both Malaysia and the Kingdom of Saudi Arabia,” said MIDF.

MIDF group managing director Charon Mokhzani commented: “We are grateful for the approval from BNM for us to start negotiations. We look forward to having a fruitful discussions with Al Rajhi Banking & Investment Corporation, Kingdom of Saudi Arabia, and to a mutually beneficial outcome.”

According to local media reports, MIDF had written to Bank Negara Malaysia last December after holding exploratory talks with Al Rajhi Banking & Investment Corp (M) Bhd, asking for permission to commence discussions for a potential merger.

MIDF is wholly owned by statement strategic investment fund PNB. The development was first reported by Bloomberg, saying MIDF was exploring a merger with Al Rajhi Malaysia in a bid to become a universal Islamic Bank.

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