Islamic Banking
Consolidation In Conventional And Islamic Banking On The Cards
By BERNAMA
Apr 30, 2007, 10:46

KUALA LUMPUR, April 27 (Bernama) -- Consolidation is on the cards for the banking industry in Malaysia -- both conventional and Islamic banking -- but when it will take place is anybody's guess.

"Consolidation is always good for the market because it provides economies of scale for the industry players to meet demand and provide quality products for consumers," said CIMB Islamic Bank Bhd's chief executive officer Badlisyah Abdul Ghani.

Specifically on the Islamic banking industry, he said it was relatively too early to tell as the market was presently big enough to sustain several players, including the foreign Islamic banks operating in the country.

"Eventually it will come to a stage where it needs to be consolidated," he told Bernama but declined to elaborate.

Asked if CIMB Islamic will be an "acquiring bank" or otherwise, Badlisyah said: "Anything is possible in terms of being an acquirer. The decision depends on how it will contribute to the enhancement of shareholders' value. So, we will not make any decision on this matter unless it makes sense."

CIMB Islamic is a universal Islamic bank, hence its niches are across the board, in consumer banking, investment banking and asset management, he said.

On the global front, Badlisyah said consolidation would take place in other parts of the world as well.

For example, according to him, there are too many banks in the Gulf Cooperation Council (GCC) countries.

"So, we may see a lot of consolidation there," he said, but declined to comment whether CIMB would take up the opportunity.

CIMB Group has an office in Bahrain with the focus on investment banking.

As for expansion of CIMB Islamic locally, Badlisyah said the plan was to have the same number of branches as CIMB Bank which currently has 383 branches.

"We have effectively established a certain reputation in the market as a leader in investment banking and asset management," he said.

"For the consumer banking side we are leveraging on the capacity, resources as well as infrastructure of our conventional counterpart. We basically have the strength to offer the best products to the market," he added.

Badlisyah said in Malaysia, there has been lately a greater focus and awareness of Islamic banking.

This, he said, has increased the number of players, boosting the industry as it moved forward.

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