Banking, Finance & Takaful

Malaysia: Japan bank unit keen to expand Islamic banking ops

btmuBank of Tokyo-Mitsubishi UFJ (M) Bhd (BTMU Malaysia), which has issued the world’s first yen-denominated “Emas” sukuk, is expanding its Islamic banking operations in the country by eyeing more non-Japanese Malaysian firms, including government-linked companies (GLCs).

Its president and chief executive officer Naoki Nishida told StarBiz the bulk of its Islamic banking portfolio in Malaysia, including Malaysian corporates and GLCs, would continue to be one of the bank’s main focus as part of its move to strengthen its Islamic banking business.

Without disclosing the names of its GLC clients and the amount of BTMU Malaysia’s financing to this client segment, he said they were, among others, corporate entities with businesses in major economic sectors, including manufacturing, oil and gas, palm oil and infrastructure development.

According to Nishida, the bank’s Islamic banking portfolio is still in early development stages.

BTMU Malaysia is keen to grow its size due to the potential growth of the business in the country and neighbouring nations such as Indonesia.

He said the bank could use Malaysia as a springboard to expand its operations in Islamic banking in the region, and continue its collaboration with its counterparts in Indonesia, as Islamic banking there had huge potential.

The other region that BTMU Malaysia will continue to focus on would be the Gulf Cooperation Council, as this was also a natural area of focus.

BTMU Malaysia started its Islamic banking business in 2008 with the setting up of an international currency business unit, focusing on Islamic banking in international currencies.

The bank launched its inaugural sukuk under a multi-currency programme of US$500mil (RM1.62bil).

Its maiden issue comprised two tranches: a US dollar-denominated sukuk with an aggregate nominal amount of US$25mil (RM81.1mil), and a yen sukuk with an aggregate nominal amount of 2.5 billion yen (RM74.4mil).

Proceeds from the first issuances would be utilised for BTMU Malaysia’s Islamic banking business, general corporate purposes, refinancing and working capital requirements.

On future issuance of sukuk or bonds for financing, he said it would depend on market conditions and funding needs, adding that it may issue ringgit sukuk if the need arose.

BTMU Malaysia, together with CIMB Investment Bank Bhd and Mitsubishi UFJ Securities International plc, are the joint-lead arrangers and joint-lead managers for the multi-currency sukuk programme. CIMB Islamic Bank Bhd, meanwhile, is the syariah adviser for the program.

Source: The Star

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