Al Rajhi closer to being a big player

Friday May 2, 2008
The Star

Al Rajhi closer to being a big player

KUALA LUMPUR: Al Rajhi Bank Malaysia is a step closer to realising its vision of becoming one of the fastest growing and leading foreign Islamic banks in Malaysia and the region.

It recently received Bank Negara approval in principle to set an international Islamic bank to undertake investment banking operations. The international Islamic bank to be set up would be a sister company of Al Rajhi Bank Malaysia, which is a subsidiary of Saudi Arabia-based Al Rajhi Bank.

Chief executive officer Ahmed Rehman said with the central bank approval, the bank hoped to commence its investment banking operations in the next few months.

“This move will allow us to have a broader portfolio comprising investment banking, retail and corporate businesses. It will allow us to make universal offering to our local as well as foreign customers, and differentiate us from our competitors,” he told StarBiz.

According to Ahmed, the licence would allow Al Rajhi to conduct non-ringgit transactions, hence allowing it to facilitate deals regionally.

The investment banking team was already on board at the bank's Kuala Lumpur office and ready to take off once the formality had been completed, he said.

The investment banking operation would be a direct branch office of the Saudi Al Rajhi Bank, and the reason being to facilitate large ticket transaction supported by the parent’s balance sheet, he said, adding that this would help tap Saudi and the Gulf's fast growing investment businesses and large customer base.

Ahmed said Al Rajhi Bank Malaysia expected to see the ratio of retail versus wholesale banking at 60:40 in two to three years and a more balanced portfolio moving forward.

Another differentiating factor of Al Rajhi compared with other Malaysian banks was in terms of financing.

“We provide financing to Middle Eastern investors looking for investment opportunities in Malaysia and, at the same time, Malaysian investors looking for similar opportunities in the Gulf.

“As the largest Islamic banking group in the world, we have the expertise to handle and execute large deals. One of it was financing the acquisition of a stake in Maxis Communications Bhd by Saudi Telecoms,'' he noted.

On the retail side, Ahmed said the underlying structures of products, turnaround time and branch experience were other differentiating factors.

For example, the Al Musafir prepaid riyal card enables pilgrims performing haj and umrah to withdraw denomination in riyals from the automated teller machine (ATM) network in Saudi Arabia.

He said all its branches were technology driven and manned by less than 10 staffs to enhance transactional efficiency and customer experience.

“Our biggest branch, with a built-up area of about 3,000 sq ft, only has eight staffs. All our operations are centralised and very technology driven. We don't have any tellers per se but only ATMs.

“This will enable our advisors to have more time to give good service and constructive advice to customers,” he said.

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