Alkhair Islamic Bank eyes acquisitions in S-E Asia

KUALA LUMPUR: Alkhair International Islamic Bank Bhd, which had previously eyed a stake in Bank Islam Bhd, is looking at potential acquisitions in South-East Asia to expand its banking footprint in the region.

Its new chief executive officer Datuk Adissadikin Ali said as a niche bank and with transactions conducted in non-ringgit, it made sense for the bank to expand regionally due to its market size.

The Bahrain-based bank is the first international Islamic bank (IIB) licensed to conduct a full range of non-ringgit activities under the Malaysia International Islamic Financial Centre (MIFC) initiative. It ventured into Malaysia as Unicorn International Islamic Bank Malaysia in 2007 and later rebranded to its present name.

“We hope to venture into the region, with a possible target in Indonesia for acquisition in the next few years. Alkhair may look at a medium-sized bank which does not pose much competition in the marketplace and complements our business.

“Indonesia is a huge market and with the Asean Economic Community (AEC) around the corner, we are keeping our options open in the region for acquisitions,’’ he told StarBiz in an interview.

According to earlier reports, Alkhair was at one point keen to acquire Dubai Group’s 40% stake in Bank Islam but the plan was later scrapped.

On another matter, he said it would consider issuing US dollar-denominated sukuk in the next three to four years to fund the corporate and investment bank’s expansion drive.

He added that although there were plans previously to acquire a stake in Bank Islam, the bank was now sticking to its niche. Alkhair was concentrating towards building a sustainable base within its core competence – non-ringgit transactions in Malaysia and the region, Adissadikin noted.

He said: “We shall also facilitate more cross-border transactions between Malaysia and Asean and the Middle East, capitalising on Bank Alkhair Group’s presence in Bahrain, Saudi Arabia and Turkey.

“This is a space whereby there is less competition compared to the ringgit market. Furthermore, ringgit-based transactions would limit our market only to Malaysia, which is relatively small compared to the region.”

The bank’s present paid-up capital stood at US$24mil, he said, noting that there were plans to increase it to US$300mil within three to five years to support Alkhair’s growth in Malaysia and the region.

Asked on Kuwait Finance House’s (KFH) plans to exit from the Malaysian market and seek greener pastures in Turkey and whether Alkhair would follow suit, he said the operating structures of the two were different.

“Alkhair is an IIB and is allowed to transact in non-ringgit banking activities whereas KFH Malaysia is mainly involved in banking transactions in ringgit and confined to Malaysia. We are not, as the bank can look at regional businesses and so we have a bigger market reach,” he stressed.

At present, Adissadikin, who was the former CEO of Export-Import Bank of Malaysia Bhd, said the focus would be to target small and medium enterprises involved in the export and import business as well as those companies and individuals who intend to trade in US dollars.

Alkhair is looking to double its customer base from 20 currently to at least 40 over the next couple of years.

He said almost half of its customers were from Saudi Arabia while the rest were Malaysia-based involved in non-ringgit banking transactions.

Although the bank’s lending limit was rather small currently at US$6mil per customer, he said it intended to raise the limit as the business grew, which the bank was confident to achieve with its ability to expand abroad as Alkhair’s business transaction was not limited to the local currency.