Khazanah sounds out Bank Islam on Muamalat stake

Khazanah Nasional Bhd plans to sell its 30 per cent stake in Bank Muamalat Malaysia Bhd, a move which could pave the way for a merger between the Islamic lender and its bigger rival Bank Islam Malaysia Bhd, sources said.

Bank Muamalat is 70 per cent-owned by conglomerate DRB-HICOM Bhd. Bank Islam is the country's oldest Islamic lender.

Khazanah, the government's investment arm, is on a mission to gradually divest all its non-core holdings and assets.

Managing director Tan Sri Azman Mokhtar, when met by Business Times last week, said Khazanah sees its stake in Bank Muamalat as a "non-core holding" and that it "could be" sold within this year. He declined to reveal more.

It is learnt, however, that Khazanah had recently sent out feelers to Bank Islam's parent, BIMB Holdings Bhd, on buying its stake. Bank Islam is said to be keen.

"Significant discussions on an M&A (merger and acquisition) exercise, with a view to a merger between both banks, is expected to start very soon," a source familiar with the plan said.

The acquisition will see Bank Islam in the driving seat, the source added.

It makes sense for Khazanah to let go of its stake in Bank Muamalat now.

Business Times reported yesterday, citing sources, that DRB-HICOM had won a bid to buy Khazanah's 32.2 per cent stake in postal firm Pos Malaysia Bhd. It is likely to ink an agreement with Khazanah early next week.

DRB-HICOM, owned by tycoon Tan Sri Syed Mokhtar Al-Bukhary, plans to use Bank Muamalat to leverage on Pos Malaysia's 692 post offices to expand its network and retail reach.

Bank Negara Malaysia had allowed DRB-HICOM to buy the 70 per cent stake in Bank Muamalat in 2008 on condition that it would later sell down its holding to 40 per cent in a year.

In September last year, DRB-HICOM's group managing director Datuk Seri Mohd Kamil Jamil told reporters it had asked the central bank for more time to do this.

He also said the group had, a few months earlier, stopped negotiations with a potential buyer from Bahrain, Albaraka Banking Group, as the parties couldn't agree on terms. - By Adeline Paul Raj of btimes.com.my