HLB in Islamic banking

Hong Leong Bank Bhd is set to tap into the growing Islamic banking business after obtaining Bank Negara’s approval to offer Islamic banking services.

The bank, which is controlled by tycoon Tan Sri Quek Leng Chan, also obtained the approval to set up a subsidiary to operate the Islamic banking business.

"The Islamic banking licence will be granted once all pre-licensing conditions have been satisfactorily fulfilled," the bank said in a statement yesterday.

Hong Leong Bank is the fifth bank to get the green light to offer Islamic banking services, joining Commerce Asset-Holding Bhd and RHB Capital Bhd, which obtained the approval earlier and would offer Islamic banking products alongside conventional facilities.

The two other banks, Bank Islam Malaysia Bhd and Bank Muamalat Bhd, are the only ones exclusively providing a full range of Islamic banking services.

Islamic banking essentialy prohibits payment of interest in favour of profit sharing.

In order to boost the country’s financial market, the government is also offering three new Islamic banking licences to qualified foreign bankers.

"It’s a good move by the Chinese-owned bank. It will benefit Hong Leong in the long run, making it easier for the bank to launch a variety of products in the future," said Avenue Unit Trusts Management Bhd chief executive director Danny Wong.

Meanwhile, SBB Mutual Bhd chief executive officer Paul Low said an approval to run an Islamic banking business presented good potential, as the Islamic market in the country was still at its infancy.

"There is a vast potential for the Islamic banking business and Malaysia could take the lead role to tap into the lucrative market," he added.

Bank Islam recently said the global Islamic market of about 800 million people, with an additional 150 million Muslims living in non-Muslim countries, offered considerable potential for Islamic finance. By Yap Lih Huey

Source: The Edge Daily
http://www.theedgedaily.com/