HSBC applies for full Islamic banking licence

By JAGDEV SINGH SIDHU

KUALA LUMPUR: HSBC Bank Malaysia Bhd, which says it is the leader in Islamic banking among locally incorporated foreign banks, has applied for an Islamic banking licence. 

It has also sought Bank Negara approval to increase the number of branches and set up more offsite automated teller machines (ATMs) in the country. 

“We have applied to Bank Negara to set up our Islamic subsidiary and we hope Bank Negara will consider our application favourably,” deputy chairman and chief executive officer Datuk Zarir J. Cama told a media conference yesterday in conjunction with the visit to Malaysia by HSBC Holdings plc chairman Stephen Green. 

“We see Malaysia as the hub for South-East Asia. It is the most important Islamic market in this part of the world. Our business is well developed here and we have some experience and expertise that we can share in other markets,” Green said. 

The bank recently announced record 2006 profit for its operations in Malaysia and credited broad-based growth for the performance. 

“We have a strong personal banking franchise, a strong commercial banking franchise and a strong corporate and institutional banking markets business. Overlaying all that is our Islamic banking thrust,” Cama said. “And we have a strong platform on which we will continue to build these businesses.” 

He said HSBC was working to ensure that Kuala Lumpur became one of the major global hubs for Islamic finance. 

HSBC deputy chairman and chief executive officer Datuk Zarir J. Cama and HSBC Holdings plc chairman Stephen Green at the press conference in Kuala Lumpur on Thursday.

Cama said HSBC Malaysia had used up its quota of four additional branches with the opening of the latest branch in Damansara Utama. “We are keen on opening more branches but that depends on Bank Negara’s policy,” he said. 

Green said SME (small and medium-scale enterprise) lending accounted for half of HSBC Malaysia's commercial banking business and through this, it had played an important role in financing the economy. 

“It is also a sign we are a local bank because many of the international banks tend to focus only on big corporates,” he said. 

Cama said the rationale for the request for eight branches was that they were an important driver of the bank’s business, especially its SME business. “It is not as if we just want branches for branches' sake. It is a question of banks like us that have been here for a long time actively participating in the economy,” he said. 

He also said increased SME economic activity under the Ninth Malaysia Plan would lead to more financial demand from the country’s smaller but important companies. 

On the expansion of the bank’s delivery channels, Cama said foreign banks not currently on its shared ATM network with three other foreign banks were welcome to join. 

But Cama said there was however a bigger agenda. “I guess the wider decision is to allow foreign banks like ourselves to have offsite ATMs. The next channel we hope will open up is offsite ATMs because we have over a million customers in Malaysia and it is a convenience for them,” he said.