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Malaysia Building Society becoming Islamic after failed mergers

Category: Banking & Finance Published: Friday, 15 April 2016 Written by Chance Allen

[KUALA LUMPUR] After two failed merger attempts with Islamic banks, Malaysia Building Society Bhd is opting to transform into a Shariah lender by itself.

MBSB has stopped offering conventional loans and sees more room for growth in Islamic services, chiefexecutive officer Ahmad Zaini Othman said in an interview on Monday. The mortgage provider and consumer lender,whose net income plunged 75 per cent last year, ended discussions with Bank Muamalat Bhd in Februaryafter a proposal to combine with CIMB Group Holdings Bhd and RHB Capital Bhd was called off in Jan 2015.

MBSBs plan is not surprising as many see Islamic finance as the way forward, said Badlisyah Abdul Ghani, president of the Chartered Institute of Islamic Finance Professionals in Kuala Lumpur and the former CEO of CIMB Islamic Bank Bhd.

People are not only wanting banks to provide Islamic products but are demanding them. Malaysia, which pioneered Shariah finance in the 1980s, aims to have 40 per cent of its banking assets complying with the religions ban on interest by 2020 from 26.8 per cent at the end of last year.

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