PNB faces uphill task on i-Maybank creation

By NG MIN SHEN / Pic TMRpic

Permodalan Nasional Bhd (PNB) is expected to face an uphill task to slice a portion of Malayan Banking Bhd’s (Maybank) outstanding shares into Shariah-compliant equities.

The country’s largest fund management company announced a plan to convert 20% of the shares in Malaysia’s largest lender into Islamic equity or i-Maybank.

But an industry expert said it would be a long and arduous task due to the complexity of the banking business and the process.

Mercury Securities Sdn Bhd head of research Edmund Tham said separating shares into conventional banking and Islamic banking is not an easy task for the Maybank Group.

“It can be done, but it will take some time. They have to submit the proposals to the regulators for approval and we still don’t know the shape of the separation process yet,” he told The Malaysian Reserve (TMR).

He cautioned that a larger acceptance of a similar move by other listed firms would largely depend on Maybank’s success.

Tham said procedures and the inner workings of the mechanism are still not made public.

“The market will likely accept it, if the process is done well. In the meantime, other banks will probably wait and see how Maybank does it. They will also see how the market responds to it.

“This sort of thing takes months of planning. It’s up to the other banks whether they want to use their resources to go down the same path,” Tham said.

On Tuesday, PNB chairman Tan Sri Abdul Wahid Omar said the fund manager was considering carving out 20% or about 2.1 billion of Maybank shares and converting them into Shariah-compliant equity.

PNB owns a 48% stake inMalaysia’s largest lender. If successful, the conversion into Islamic shares would create the single largest Islamic equity on Bursa Malaysia, valued at RM20 billion, or almost three times larger than BIMB Holdings Bhd’s market capitalisation.

Maybank has a market capitalisation of about RM102 billion. Abdul Wahid said that about 25% of Maybank’s group earnings are derived from the Shariah-compliant business.

Maybank recorded a net profit of RM6.74 billion last year, with revenue of RM44.65 billion. Its Islamic banking operations contributed RM1.28 billion to group earnings in 2016, as per the bank’s 2016 financial statement.

If the plan succeeds, it will create over RM20 billion worth of Shariah-compliant instruments, Abdul Wahid had previously said there is a need to list more Islamic financial institutions on the local bourse. Out of the current 676 Shariah-compliant securities listed on Bursa Malaysia, only BIMB Holdings Bhd and Syarikat Takaful Malaysia Bhd are from the financial sector.

Investors, however, are taking a wait-and-see attitude as Maybank’s share price closed unchanged at RM9.69 yesterday.

Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew said there is still a possibility for Maybank to list its other business despite the proposed carve-out Islamic equity.

“If the 20% is carved out, listing the business is a possible step further down the line,” he said.

RELATED ARTICLES

Wednesday, January 2, 2019

Lenders’ growth to moderate amid gloom

Tuesday, January 15, 2019

Kuwait Finance House could exit Malaysia