Bank Islam Malaysia advises rivals to start merging

Industry’s stiff competition forces small lenders to team up with larger ones to form stronger entities.

Islamic banks in Malaysia should start merging to form stronger entities, says the chief of Bank Islam Malaysia Bhd, the country's oldest Islamic lender.

There are currently 16 Islamic banks in the country, of which 10 are local, the largest being Maybank Islamic Bank Bhd.

Maybank Islamic, with an asset size of RM59.6 billion ($19.75 billion), is also the region's biggest. Bank Islam has some RM31 billion ($10.28 billion) in assets.

"I think it's time that Islamic banks should start merging, but I think the rule of the game is that it should be industry driven...it shouldn't be forced," Bank Islam's managing director Datuk Seri Zukri Samat said. 

As competition in the industry grows keener, smaller banks may have no choice but to look for a partner to merge with, he said.

Last week, Bank Islam's parent BIMB Holdings Bhd decided against pursuing a merger with smaller rival Bank Muamalat Bhd.

View the full story in Business Times.