Islamic Bank to Sell Stake to Dubai Group

Posted 16 May 2006 @ 02:19 am EET     Print     Reprint     E-Mail     Comments

KUALA LUMPUR, Malaysia (AP) - The board of Bank Islam Malaysia Bhd. has approved the sale of a 40 percent stake in the bank to Dubai Investment Group LLC through an issue of shares, a business weekly said.

The stake in Malaysia's largest Islamic bank is valued at between 800 million ringgit ($223 million) and 900 million ringgit ($251 million), The Edge said in its current issue, quoting unidentified sources.

The Dubai-based company and Bahrain-based Unicorn Investment Group had presented bids for up to 49 percent of the bank last month.

The Edge said Dubai Investment Group probably won because of its weight and sprawling business interests. It is the investment arm of Dubai Holding LLC, which is involved in sectors such as finance, real estate, energy, technology, health and tourism.

Bank Islam officials could not be reached for comment Sunday, but the bank said earlier this year that a partnership with Dubai Investment Group would significantly improve its performance in the long run and fuel its emergence as a leading global financial institution.

Bank Islam, a subsidiary of government-controlled BIMB Holdings Bhd., needs to sell equity to raise fresh capital after it announced in October a net loss of 456.4 million ringgit ($127.7 million) for the year ending June 2005.

Government and Bank Islam officials have indicated the losses were because of large provisions for non-performing loans given to companies in Bosnia-Herzegovina and South Africa.

Islamic banks operate under Shariah laws, which ban investments that pay interest or that derive profit from alcohol, tobacco, pork, gambling or weapons.