Largest Islamic lender planned

KUALA LUMPUR, Feb 5: Kuwait Finance House unveiled plans on Monday to lead a consortium that could invest more than $3.43 billion in an indebted Malaysian bank and turn it into the world’s largest Islamic lender.

Kuwait Finance House, reacting to weeks of media speculation, confirmed the bare outline of a deal that was nearing completion between its consortium of unnamed investors and the ultimate owners of Malaysia’s fourth-largest lender, RHB bank.

“The consortium could invest in excess of 12 billion ringgit ($3.43 billion) for this project,” Kuwait Finance House said in a statement emailed to media in Malaysia. “This will be one of the largest, single foreign direct investments into Malaysia.”

It said in a statement it had agreed to buy about 32 per cent of RHB bank’s parent, Rashid Hussain, from Malaysia's Utama Banking, for an undisclosed but “very attractive” offer in just one of a series of transactions.

Utama's stake in Rashid is worth about 350 million ringgit, based on Monday's closing price. The stock ended up 4 per cent at 1.51 ringgit. Utama shares closed up 5.8 per cent at 1.65 ringgit, and RHB Capital shares ended 8 per cent higher at 3.98 ringgit.

The consortium also stood ready to clear the debts of Rashid Hussain, it added. Rashid’s debts about 3.5 billion ringgit, including a bond repayment of $265 million due in June.

The deal could also include an offer by Rashid to sell its 65 per cent stake in RHB Capital, the listed unit that houses RHB bank. It did not give details, but a Malaysian daily has said this forms part of the plan to clear Rashid's debt.

The Kuwaiti bank also signalled how the consortium could make such a large overall investment without breaching the country’s ban on foreigners owning more than 30 per cent of a local bank. “RHB will not be foreign controlled but will operate as an Islamic brotherhood partnership,” Kuwait Finance House said.—Reuters