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Bank Islam Takes 20% Stake In Sri Lanka’s Amana Bank

 

Agrees to provide technical expertise and know-how to grow the Bank    

KUALA LUMPUR, Friday 8 April 2011 – Bank Islam Malaysia Berhad (“Bank Islam”) announced the completion of a share subscription exercise which gives it a strategic 20% stake in Amana Bank Limited (“Amana Bank”) in Sri Lanka. Amana Bank is poised to become Sri Lanka’s first Islamic commercial bank.

The 20% stake arose via:-

(i)        a share-swap of Bank Islam’s existing shareholdings in Amana Investments Limited (“Amana Investments”) for shares in Amana Bank.

(ii)       the subscription of new shares in Amana Bank for a total consideration of approximately RM 21.26 million.

With the share swap, Bank Islam’s total investment cost amounts to approximately RM 22.6 million. It is Bank Islam’s first overseas banking venture in pursuit of its regional expansion plan.

Bank Islam’s 20% stake makes it the single largest shareholder in this strategic tie-up   where its partners include the Islamic Development Bank (10%) and AB Bank Limited of Bangladesh (15%). Amana Bank is currently in the course of setting up its various divisions and intends to commence operations in the second half of this year.

In addition Bank Islam will play a significant role in the development and growth of Amana Bank through a Technical Advisory Services Agreement (“TASA”). The agreement effectively paves the way for Bank Islam to export its expertise and know-how in pioneering Islamic banking to Sri Lanka, where a sizeable 8% of the country’s nearly 22 million population are Muslims who are mainly involved in trade and commerce.    

Under the TASA, Bank Islam will be the key technical partner of Amana Bank, providing technical assistance in areas such as consumer banking, treasury, business banking and information technology, which will complement Amana Bank’s strategies of developing Islamic financial service products.

It will also provide guidance on transforming Amana Investment’s business into that of an Islamic banking business under Amana Bank; as well as sharing its knowledge in improving corporate governance, risk management and control systems.

The Completion Ceremony for the Share Subscription and TASA was held in Kuala Lumpur today,  witnessed by Bank Negara Malaysia Assistant Governor, En. Bakarudin Ishak and High Commissioner of Sri Lanka H.E. Dr. D.D. Ranasinghe, accompanied by Bank Islam Chairman Dato’ Zamani Abdul Ghani.

Bank Islam Managing Director, Dato’ Sri Zukri Samat, speaking at the ceremony said:  “This investment represents part of Bank Islam’s sustainable growth plan strategy and is in line with our vision to become a global leader in Islamic banking.”

“Sri Lanka is one of the few non-Islamic countries to have legislation for the Islamic banking sector. It is a market ready to embrace Shariah-based banking in a significant way as Sri Lankan Muslims have long awaited the entry of a full-fledged Islamic financial institution that can provide them the opportunity to invest or deposit their money in a Shariah-compliant manner. “

Dato Sri Zukri said: “Both parties have much to contribute – Amana Bank has the network, client base and local know-how, while Bank Islam has its Islamic banking expertise and experience to make this tie-up a success. The strategic investment will facilitate Bank Islam’s growth plans in Sri Lanka.   

“As the pioneer of Islamic banking in Malaysia, we are happy to be given this opportunity to play a prominent role in an economy that recognizes the potential of Shariah-based financial services as a driver of growth,” he added.

Mr Faizal Salieh, Managing Director of Amana Bank said, “The road to Islamic banking in Sri Lanka began in 1997 when Amana Investments was launched as the country’s first Islamic non-bank financial institution, but with an aspiration to become a full-fledged Islamic commercial bank some day.”

He said the two pioneers – Bank Islam in Malaysia and Amana Investments in Sri Lanka – “connected” in October 1999, and this connection strengthened over time through capital investments and technical assistance and worked together to set up Sri Lanka’s first licensed Takaful company called Amana Takaful, in 2002.

“Today, nearly 14 years after Amana Investments was first set up, it has fulfilled its dream of forming Amana Bank as Sri Lanka’s first licensed Islamic commercial bank, with Bank Islam our long standing Malaysian friend as the lead strategic partner,” he added.

Mr Faizal said he is confident that Amana Bank will offer the Islamic banking value proposition to all communities alike, not just the Muslims in Sri Lanka. 


 
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