DRB-Hicom plans mega Islamic bank

The creation of an Islamic bank is in the pipeline for DRB-Hicom provided it succeeds in paring down its stake in Bank Muamalat Malaysia Bhd to Affin Holdings Bhd.

“My main concern is not the sale of the stake, but the local Islamic financial market. What I see is a market saturated with too many Islamic banks going after the same customers and offering the same products,” said group managing director Datuk Seri Mohd Khamil Jamil.

He said the group had been instructed by Bank Negara to look at offshore opportunities and the stake sale would provide it more capability and capacity to expand.

“We were invited to open a Bank Muamalat branch in China which has about 60 million Muslims. Opportunities are there and we should be able to explore beyond the Malaysian shore,” he said.

The group is still in preliminary discussions with Affin over the stake sale, and the parties have to come up with a proper business model before submitting the proposal to Bank Negara by year-end. In 2008, DRB-Hicom was given the green light to buy a 70% stake in Bank Muamalat on condition that it would pare down its stake to 40% . However, it failed to pare down the stake to Bank Islam Malaysia Bhd and Bahrain-based Al Baraka.

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