The National Bank of Abu Dhabi (NBAD) has chosen to focus on being a conventional wholesale bank in Malaysia first, before expanding into Islamic finance later.
The bank, which launched its Malaysian subsidiary National Bank of Abu Dhabi Malaysia Bhd (NBAD Malaysia) yesterday, was reported in September to have been interested in seeking an Islamic banking licence for NBAD Malaysia.
Bank Negara Malaysia representatives were not immediately available for comment on the bank’s application status. However, NBAD group chief executive officer (CEO) Michael Tomalin said its expansion plans for Islamic banking in Malaysia as a whole are for the long term.
“We had the opportunity to come into the country as an Islamic bank. (But) we came in as a conventional bank and we believe as a conventional bank we can develop businesses with the Middle East in the near term. In the longer term, we will consider expanding into Islamic finance,” said Tomalin at a media conference in Kuala Lumpur yesterday.
NBAD Malaysia CEO Leong See Meng said the bank’s primary focus would be bridging Malaysian businesses with the Arab world, mainly in the oil and gas sector, and the electronics industry.
For the first-half of 2012, the bank’s Islamic finance operations contributed 3%, or US$23 million (RM70.61 million), of the total operating profits of US$749 million.
According to the bank, this will increase to 10% by 2020 through the establishment of Shariah-compliant products in Malaysia, Egypt and Oman,Tomalin said after the media conference.
NBAD has also selected Malaysia, its first South-East Asian office, as its regional hub, given the country’s existing relationship with the Gulf Cooperation Council (GCC) countries and the strategic positioning created by the free-trade agreement between the GCC and Malaysia.
Over the next 10 years, the bank plans to set up 30 branches in Malaysia alone, beginning with five branches over the next three years, said Leong. The bank will also expand its international network from 14 countries to 41 over the next 10 years.
Its Malaysian operation will primarily focus on providing working capital and trade finance facilities to government linked companies and other local businesses.