Prior to their merger in May this year the Islamic units of Hong Leong Bank and the former EON Bank, the previously individual entities of Hong Leong Islamic Bank (HLISB) and EONCap Islamic Bank, were rarely considered a major force on the Malaysian banking scene, much less on the international front. While both banks built up sizable assets, the businesses were mainly offered as a complementary service to their respective parent banks’ core conventional offerings.
However, now with a combined asset base of around RM20 billion (US$6.36 billion) following the vesting of EONCap Islamic to HLISB on the 1st November, the newly enlarged entity of HLISB is eyeing a larger slice of the Islamic financial industry.
Its merged asset base has put it in the league of CIMB Islamic and Maybank Islamic, the dominant players in the industry, while the appointment of seasoned banker Raja Teh Maimunah Raja Abdul Aziz as its new CEO is widely anticipated to drive HLISB’s ambition of becoming a leading player in the global Islamic finance market.
New direction
Although the larger of the two in terms of assets, HLISB struggled to differentiate itself in Malaysia’s competitive Islamic finance market; while EONCap Islamic was mainly focused on its consumer financing portfolio.
However, where the separate entities of EONCap Islamic and HLISB may have been perceived as lackluster providers of Shariah compliant financial services in the past, the appointment of Raja Teh appears to signal that the fresh-faced HLISB now means business.
Less than a month since it completed its merger with EONCap Islamic, HLISB has already unveiled clear objectives: of continuing to focus on the consumer banking market while strengthening its wholesale banking division, headed by Fozia Aminulla, previously CEO of EONCap Islamic.
“We at HLISB are inspired to follow in the footsteps of our parent bank to become a premier player in the Islamic banking circuit. The next few months will be challenging in the face of global market conditions, yet exciting as we embark on expanding our product range and services as well as market reach. We aim to intensify our reach in the consumer market through the group’s wide branch network and to provide our customers with greater product choices.
“We are also further developing our wholesale banking capacity to better serve our corporate customers and to deepen our participation in the Islamic capital markets segment and treasury activities,” said Raja Teh.
With 18 years experience in the financial industry and having held various leadership roles on the Islamic banking scene, Raja Teh may just be the catalyst HLISB needs to strengthen its business and is likely the driving force behind the bank’s new aspirations.
Prior to her appointment, she was the global head of Islamic markets at Bursa Malaysia, the local bourse, where she played a critical role in the setting up of commodity trading platform Bursa Suq Al-Sila’.
She was also the chief corporate officer and head of international business at Kuwait Finance House Malaysia and CEO of Bank Alkhair Malaysia, formerly known as Unicorn Investment Bank. Additionally, her career has seen her serve at CIMB Investment Bank, while she is also credited with establishing the investment banking team at RHB Investment Bank.
Having Raja Teh in the driver’s seat will likely offset the lack of direction the bank has suffered from in the past. However, having just completed its merger, HLISB is still very much in the planning stage of its new ambitions.
According to Raja Teh, the bank’s immediate plans involve focusing on the integration of HLISB and EONCapital, particularly in the area of human capital. HLISB will also leverage the 329-branch distribution network of Hong Leong Bank, as its consumer banking division remains an important segment for HLISB.
She also said the bank has already put together its corporate investment banking team, including a dedicated Islamic capital markets team. “They are working on deals but we cannot talk about them until we’ve inked them,” she said.
HLISB is also widely anticipated to make a bigger mark on the global Islamic banking scene and looks forward to participating in cross-border transactions. “Certainly, that’s where I want to go; I’ve always been a proponent of cross-border business, especially in growing the Islamic finance industry.
“However, what is critical in the immediate future is to build our local and domestic strength; establish a strong presence as a merged entity, then move into the region. Our parent is already in the region. It will be inevitable to look at other markets,” said Raja Teh.
Building up business
At the fore, however, is the need for HLISB to build up its existing business. Raja Teh said that the bank expects its asset growth to continue in line with previous years, with an eye on improving its growth rate; although she added that the bank has not identified a specific target for increasing its assets.
The bank is also considering increasing the number of its dedicated Islamic branches from the existing nine, in tandem with its broader business plans currently being worked on.
As for its wholesale banking division, Raja Teh said that the next three to six months will mainly be spent on getting in its human infrastructure in place.
With a fresh face both literally and figuratively, HLISB appears set to become a competitive player in the global Islamic finance stage; and could emerge as the one to watch on the corporate investment banking and deal-making side. — EB