Malaysia to overtake Singapore in foreign bank race

Malaysia is set to overtake Singapore with the granting of an additional five licences to foreign banks by 2012 bringing the total to 18 compared to Singapore’s six Qualifying Full Banks.

"There's going to be competition, yes, but you're making your banking system more relevant," said JPMorgan head of research Chris Oh in a report by New Strait Times. He added proper execution is necessary in order for the liberalisation moves to filter through to the economy.

Up to two licences for Islamic banks, with a paid up capital of at least US$1 billion, will be granted by Bank Negara Malaysia this year. Currently there are no such banks of the same type and size undertaking business here or abroad. Interested parties are yet to be identified, but Bank Negara said there would be a transparent application process.

Foreign banks interested to do business in Malaysia have until 31 October 2009 to file their applications and, if successful, can begin operations in 2010.