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Last Updated: Sep 25th, 2006 - 11:36:04 |
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"All this can't be done overnight, so I will need at least two years. Now we need to prioritise what is more important. In terms of costs, we also have to look at the budget and do things in stages. But we cannot be too ambitious and start embarking on everything." - Bank Islam Malaysia Bhd managing director, Datuk Zukri Samat. |
BANK Islam Malaysia Bhd managing director Datuk Zukri Samat has a tough job in his hands - turning the bank around.
The former Pengurusan Danaharta Nasional Bhd managing director has brought in his team from the agency to deal with arguably the main problem of Bank Islam, which is the RM2.5bil worth of non-performing loans.
Zukri spoke to the media last week on his first 100 days on the job and how he sees Bank Islam evolving in the future.
Q: WHAT were you told when you took up this job?
A: They told me not to expect a bed of roses. I more or less knew what I was up against and the biggest problem was the non-performing finance (or NPLs). My first priority was to identify the problems and weaknesses of the bank and to address them in stages.
In terms of weaknesses, I noticed that the quality of assets was low. As at March 31, 2006, our non-performing finance was at RM2.5bil.
The bank also did not take full advantage of Danaharta in the 97/98 financial crisis. In terms of number of loans or financing sold to Danaharta, it was very small compared with other banks. If they had been more aggressive in selling their loans to Danaharta, the quality of assets would have improved a lot.
With my background in being familiar with NPLs, the first thing I did was to set up a special asset management unit that deals with non-financing and delinquent accounts.
What we have done is to segregate all loans classified as non-performing and delinquent into one special basket. We have a dedicated team to handle just that and we recruited some ex-Danaharta staff who are spearheading this unit now.
The bank is also short of capital. We've been wooing foreign investors to take a stake in the bank, and signed an agreement with Dubai Investment Group (DIG) from the United Arab Emirates to take up a 40% stake in Bank Islam. They will inject RM820mil capital into the bank.
On top of that, Tabung Haji (TH) has agreed to directly subscribe to the bank's capital, at 9%, which brings in RM186mil in capital. The money has not come in but the agreement has been signed and hopefully by year end, the bank's capital will be increased.
After the capital injection, DIG will own 40% of the bank; TH 9% and the balance will be held by BIMB Holdings, which is listed. That should happen before the end of the year.
Q: What needs to be improved?
A: In terms of new initiatives, we have re-looked at our vision statement and adopted a new one that has been agreed upon by the board. We want to be the global leader in Islamic Banking.
To achieve that, there's a lot we need to do. First, we have to reorganise the bank. The structure is there, but in my mind, the reporting structure can be improved.
As MD, I can concentrate more on the business side while my second man, who is the chief operating officer, can handle the operations.
We also lack specialists and have brought in specialists for a few areas where they can add value. For example, the risk management side is an area where we need a lot of improvement.
We need to diversify our products and to keep being innovative so as to stay ahead of our competitors. So, we brought in a new person who is looking at products.
Credit recovery is another area where we have brought in former Danaharta people. We have brought in about half a dozen of the management team for this.
Q: How far is Bank Islam behind other comparative Islamic banks, in Malaysia and elsewhere?
A: I think we started on a good note, but in the last couple of years, due to the NPL problem, the bank has not been very aggressive in its marketing efforts. I agree that we have kept a low profile, but with the new capital and management team, we want to put Bank Islam where it should be.
Q: You have a big task ahead to transform Bank Islam. How long will it take and how much will it cost?
A: All this can't be done overnight, so I will need at least two years. Now we need to prioritise what is more important. In terms of costs, we also have to look at the budget and do things in stages. But we cannot be too ambitious and start embarking on everything.
Q: Any plan to open branches overseas?
A: It is not something I would like to pursue aggressively but if the opportunity arises, we would not close our doors, especially with DIG coming in.
Q: How do you expect to improve your NPL ratio?
A: We have already set internal targets, which we will not reveal, but provisions have already been made. I'm confident we can reach them and any more is a bonus.
Q: You want to re-look at your business focus. What are you looking at?
A: In a nutshell, I think we need to have a new strategy in the way we do business. We have to find our own niche market. We cannot compete with Maybank or Public Bank, and follow what they do.
We should bank on our own strengths and capitalise on them. We have to be more focused.
Q: What's your first impression on how Bank Islam was run (when you first came?) compared with what you've experienced with other banks?
A: Of course, it's not the same. Every bank does things differently, but there are certain similarities with the banks. This one is special because it does Islamic banking but definitely, I may not be comparing apple to apple.
Q: Is the current network of branches sufficient?
A: I think so. Even in Sabah and Sarawak, we are quite well-represented.
To me, we have enough but that will not stop us from opening new branches. But I think we have achieved critical mass.
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