UAE. Dubai Group, an state-owned investment vehicle is reviewing options for its stake in Malaysia's Bank Islam as it shifts its strategic focus closer to home, it said on Thursday.
If Dubai Group eventually sells its stake in Bank Islam, it could spark a round of consolidation among Malaysia's Islamic banks. Several Islamic bankers in Malaysia have said Maybank's Islamic subsidiary wanted to acquire a stake in Bank Islam.
"Dubai Group confirms that it is in the process of reviewing its strategic options relating to its (Bank Islam) stake," it said in a statement on its website. "Following the reassessment of its investment strategy, Dubai Group has redirected its competitive advantage closer to home."
Bank Islam, Malaysia's No 2 sharia bank, had offered preference shares to its shareholders in April to raise up to 540 million ringgit (US$156 million).
But Dubai Financial Group, a unit of Dubai Group which holds a 40% stake in the Malaysian lender, refused the offer, Bank Islam said on Thursday.
Dubai Group said, however, that Malaysia remained a key market for future investments.
Islamic banking group BIMB Holdings Bhd owns 51% of Bank Islam, with Lembaga Tabung Haji, or the Malaysian pilgrims fund, holding the remaining 9%.
Both Malaysian shareholders took up the share offer, allowing Bank Islam to raise its Tier 1 capital by 324 million ringgit, it said in a statement.
"Dubai Financial has not taken up the offer to subscribe to its portion of the (share offer) by 30 September 2009 amounting to 216.0 million ringgit," Bank Islam said, adding it would offer the shares to the other two shareholders on a pro-rata basis.
Both shareholders have to decide whether to take up the offer within seven days, it said.