HSBC and OCBC get Islamic banking licences

KUALA LUMPUR: Two locally incorporated foreign banks, HSBC Bank Malaysia Bhd and OCBC Bank (M) Bhd, have been granted Islamic banking licences by Bank Negara and would be establishing separate and wholly-owned Islamic banking subsidiaries in the country. 

HSBC Bank Malaysia said in a statement that its new entity would be called HSBC Amanah Malaysia Bhd and would have universal banking scope. 

“With this licence and the strong demand for Islamic products and services, we intend to contribute towards the acceleration of the industry's growth and bring HSBC Amanah to the next level,'' deputy chairman and CEO Irene Dorner said in the statement. 

“The awarding of the licence is also timely as it is in line with the HSBC Group's initiative of making Malaysia the regional hub for HSBC Amanah.'' 

HSBC has been offering Islamic financial services in Malaysia since 1994. The Amanah brand was established globally in 1998. 

“The Islamic banking subsidiary will allow HSBC customers to bank with HSBC Amanah across an expanded nationwide delivery channel,'' said HSBC Amanah managing director Yakub Bobat. 

“The branches and offerings of the Islamic banking subsidiary will complement HSBC's conventional banking business.'' 

Bobat said HSBC Amanah would consolidate its business across Asia-Pacific and use Malaysia as a regional centre and develop new markets by exporting best practices. 

In a separate statement on Wednesday, OCBC Bank Malaysia said it had received approval “in-principle” from Bank Negara to carry out Islamic banking business and to establish an Islamic banking subsidiary. 

OCBC said the Islamic banking subsidiary, when established, would be permitted to conduct the full range of syariah-compliant universal banking business, including Islamic hire purchase and syariah-compliant corporate finance activities. 

“We have been involved in Islamic banking for the past 12 years and are thus not new to the business,'' director and CEO Datuk Albert Yeoh said. 

“The approval from Bank Negara provides us with the opportunity to take our Islamic banking business to the next level and we will be positioned to develop OCBC Bank into a one-stop centre for Islamic banking.'' 

For the nine months ended Sept 30, OCBC Bank's income from Islamic banking increased 57% to RM58mil. As at end-September, Islamic banking customer deposits totalled RM2.9bil, up 35% from a year ago. The bank has RM3.5bil in assets and RM1.8bil in outstanding financing. 

OCBC has more than 20 Islamic banking products and has introduced a range of deposit products and structured investments. 

On the corporate front, OCBC said it had made significant inroads into syariah-compliant investment banking through a series of deals that included the first palm oil and first multiple real estate securitisation exercises. 

The granting of licences to foreign-incorporated banks in the country widens the scope of Islamic banking in Malaysia. Large Islamic banks from the Middle East have been given universal Islamic banking licences and many have opened branches.  

Islamic banking now accounts for 13% of the country’s banking assets. Islamic capital market products such as sukuks and bonds have also dominated the capital markets in recent years.