KUALA LUMPUR: In a move to tap into the growing number of Islamic funds, Permodalan Nasional Bhd (PNB) is working on a proposal to carve out a portion of Malayan Banking Bhd (Maybank) shares into a separate syariah-compliant vehicle.
If the proposal comes to fruition, it would create a RM20bil syariah-compliant banking entity – which is almost three times the size of BIMB Holdings Bhd, currently the biggest listed Islamic bank on the stock exchange.
It would also increase the number of quality syariah-compliant assets in the financial sector, something that is lacking now, and provide wider options for large funds such as the Employees Provident Fund (EPF) to invest.
PNB chairman Tan Sri Abdul Wahid Omar said the proposal that it was working on effectively entailed designating about 20% of Maybank shares into a vehicle and ring-fence its profits.
“At the moment, about 25% of Maybank’s income is derived from its syariah-compliant products. The plan we are working on is that the earnings from this segment be ring-fenced into a separate entity which will be syariah-compliant. The shares in the separate entity can be traded as i-Maybank.
“It is just like Public Bank Bhd and Public Bank-foreign,” he said at a luncheon talk organised by the Malaysian Press Institute and PNB yesterday.
Wahid said the proposal it was working on was still “work in progress” and needed to be approved by all the relevant parties.
“If we are successful, then other large listed companies with sizeable earnings that are syariah-compliant can also undertake similar exercises,” he said.
If PNB is successful in creating i-Maybank, then it would create a new pool of assets for syariah-compliant funds to put their money in. Other banks such as CIMB Group Holdings Bhd and RHB Bank Bhd and even the stock exchange, Bursa Malaysia Bhd, can create a separate class of syariah-compliant shares.
There is a now a lack of syariah-compliant stocks in the financial sector because conventional banking heavyweights are not considered fully Islamic because of how they compute the interest in their loans.
This is a drawback for funds such as the EPF, which has started a syariah-compliant fund with a target of RM100bil in January this year.
Maybank is the largest investment for PNB, the unit trust giant with more than RM260bil of assets under its management.
Since Wahid took over the helm of PNB a year ago, the fund has undertaken several corporate restructuring exercises to ensure its strategic companies are focused on their core businesses.
For instance, Sime Darby Bhd is being demerged with a proposed listing of its property and plantation divisions separately, leaving the automotive and heavy machinery businesses with the holding company.
Wahid took over as chairman of PNB on Aug 1 last year and two months later, Datuk Abdul Rahman Ahmad joined him as group president and chief executive officer. Under the leadership of the duo, the total market capitalisation of the strategic companies under PNB has increased by RM40bil in the last one year, with a total return of 28.2%.
Wahid said that PNB was looking at creating more syariah-compliant vehicles, and he has set a target of increasing the number of syariah-compliant companies in its portfolio from 66% to 75% within the next three years.
During a question-and-answer session, Wahid also said that he would not be going back to serve in the Cabinet again.
“I have decided not to be a politician and feel I can serve the country better by being in the corporate world,” he said.
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