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Press Release
19 Apr | Monday
Bank Islam’s ratings unaffected by proposed reorganisation
BIMB Holdings Berhad’s (BIMB or the Group) plan to collapse its financial holding company structure and elevate Bank Islam Malaysia Berhad (the Bank) to the apex of the banking group will not affect the Bank’s financial institution ratings or sukuk ratings. Bank Islam, rated AA3/Stable/P1, is a wholly owned subsidiary of BIMB. Although the effective stake of the Bank’s ultimate majority shareholder – Lembaga Tabung Haji – will reduce to about 48% from 53.1% (8 February 2021) post-restructuring, we expect support from the latter to remain forthcoming, if required. 
 
As part of its regulatory requirements, Bank Negara Malaysia requires financial holding companies such as BIMB to maintain minimum capital and liquidity requirements. Hence, the plan to move away from the financial holding company structure will lower regulatory compliance costs and improve operational efficiencies.  Under the proposed restructuring, Bank Islam will also assume BIMB’s listing status.
 
While Bank Islam will acquire BIMB’s stockbroking and property investment entities, we expect the Bank’s business profile to remain largely unchanged given the small contribution of these operations. Syarikat Takaful Malaysia Keluarga Berhad, currently 58.9% owned by BIMB, will not be placed under the umbrella of Bank Islam. The impact of the exercise on Bank Islam’s capitalisation will be negligible – the Bank’s common equity tier-1 capital ratio stood at 14.7% as at end-December 2020.
 
Pending approval from the relevant authorities, the restructuring is targeted to be completed by 3Q 2021.
 
Ratings of Bank Islam’s sukuk 
Instrument Rating Rating Outlook
RM1bil Subordinated Sukuk Murabahah Programme (2015/2045) A1 Stable
RM10 bil Sukuk Murabahah Programme (2018/-)
  • Senior Sukuk Murabahah
  • Subordinated Sukuk Murabahah
 
AA3
A1
 
Stable
Stable
 
Analytical contact
Wong Yin Ching, CFA
(603) 3385 2555
yinching@ram.com.my
 
Media contact
Padthma Subbiah
(603) 3385 2577
padthma@ram.com.my
 
Date of release: 19 April 2021
 
 
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.
 
RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.
 
Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.
 
Published by RAM Rating Services Berhad
Copyright 2021 by RAM Rating Services Berhad
source: RAM Rating Services
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