BCD sets up Islamic arm and plans expansion<\/p>\n
Agence France-Presse, Kuala Lumpur<\/p>\n
Malaysia's fourth largest lender Bumiputra-Commerce Bank (BCB) on
\nFriday launched its Islamic banking arm and unveiled plans for a
\nforeign alliance to expand to the lucrative Middle East market by
\nnext year.<\/p>\n
Commerce Tijari Bank kicked off with a branch in the capital
\nKuala Lumpur and will roll out services nationwide later this
\nyear to BCB's existing four million customers, said Tijari chief
\nexecutive Nor Azzam Abdul Jalil.<\/p>\n
Tijari would seek to expand globally from next year with a
\nbranch in the Labuan offshore financial center off Borneo island,
\nthrough regional tie-ups with BCB's affiliates such as
\nIndonesia's PT Bank Niaga, and leverage on BCB's overseas
\nbranches in London, Singapore, Hong Kong and Japan.<\/p>\n
Tijari is currently in negotiations with several global
\nplayers in Islamic financial services for a possible alliance and
\nhopes to conclude talks by the end of this year, he said.<\/p>\n
\"We have talked to a few (foreign institutions) from the
\nMiddle East, Europe and the United States. There is a lot of
\noverseas interest after the central bank allowed Islamic banks to
\nsell 49 percent of their shareholdings,\" he told reporters.<\/p>\n
\"We hope to open up our own branch in the Middle East. We are
\nlooking at Dubai or Bahrain.\"<\/p>\n
The central bank last month eased restrictions on foreign
\nownership in local Islamic banks, raising the ceiling to 49
\npercent from 30 percent so as to boost Malaysia's aim to become a
\nkey Islamic financial hub in the region.<\/p>\n
It has awarded licenses to three Middle East players and plans
\nto allow all local groups to set up Islamic banking arms to
\nbolster the sector and encourage offshore expansion of such
\nservices.<\/p>\n
Despite growing competition, Nor Azzam said there was still
\nroom for growth as assets in the Islamic banking sector currently
\nrepresented only around 10 percent of those in the entire banking
\nsystem. The government aims to double this by 2010.<\/p>\n
\"The entrance of foreign banks, I think, will add value rather
\nthan become an obstacle to Islamic banking. Competition is good
\nbecause it will keep us on our toes. The industry will see more
\ninnovative products,\" he said.<\/p>\n
BCB is the commercial banking arm of Commerce Asset-Holding,
\none of the country's 10 banking groups.<\/p>\n
Nor Azzam said Tijari was expected to contribute about 10
\npercent of the group's net income within the next three years and
\nup to 20 percent in five years. Its asset base is likely to grow
\nto four billion ringgit (US$1.1 billion) by then, he said.<\/p>\n
He said Tijari's Islamic loans growth was targeted at between
\n10 and 15 percent a year amid growing demand due to interest rate
\nvolatility in the global market.<\/p>\n
\"There is a huge demand right now because of the interest rate
\nscenario. Islamic banking gives certainty to future financial
\nplanning for customers,\" he added.<\/p>\n
Islamic banking, first introduced in Malaysia in 1983,
\ncombines Islamic laws which forbid interest payments, with modern
\nbanking principles.<\/p>",
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