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M’sian banking scene developing well

by Ronnie Teo, ronnieteo@theborneopost.com. Posted on October 29, 2012, Monday

Najadi believes the local banking sector has done quite well since he first forayed into the scene back in 1975 

Hussain Najadi

KUCHING: As one of the pioneers and big players in Malaysia’s banking scene, Hussain Najadi is impressed with the progress made since he entered the local sector some 27 years ago.

The banker from Bahrain first ventured into the country as one of the founding fathers of Arab Malaysian Development Bank (AMDB) – now called Ambank – in 1975, with MIDF and Malayan Banking Bhd (Maybank) holding 55 per cent of AMDB and AIAK Group holding 45 per cent of the equity.

Today, he is chairman and chief executive officer of the AIAK Group and is now based in Kuala Lumpur.

“Malaysia has done quite well in managing its banking sector thanks to the steady guiding hands and supervision of Bank Negara Malaysia,” Najadi said to The Borneo Post in an interview.

“I am certain that Malaysia will do fine and surmount financial crisis globally, if it hits our shore in Malaysia. The financial system has evolved remarkably since 1975. It has become very sophisticated, at par with the best of the Western standards.”

To recap, AIAK Group through Arab Malaysia pioneered the first financial link with the Gulf countries now called Gulf Cooperation Council. Currently, only several Arab banks have followed AIAK’s pioneering steps and have set up banking operations in Malaysia.

“We pride ourselves to be the pioneers in this field,” Najadi added.

Consequently, AMDB was made public in 1981 and AIAK exited and sold its block of shares to Tan Sri Azman Hashim, who was then the executive director of Maybank.

“Azman has done a very good job in taking Ambank to much greater heights since then,” he opined.

Speaking on the country’s growth niches, Najadi said both merchant banking and retail banking would grow in this country albeit at a slower pace.

“The industry in my view must go beyond Malaysia’s borders into Asean, China, India and the Middle East,” he outlined. “Consolidation and mergers is the way to strengthen the banking industry in Malaysia and face stiff competitions from banks globally entering the scene here in Malaysia, and to create a viable platform for banking to move into Asean.

“CIMB Group and Maybank are two best examples of this expansion to cross border markets. More banks must do the same in my view, in order to grow.”

Najadi also believed that Islamic banking has done extremely well in Malaysia, but tighter governance on the quality and the type of Islamic sukuk must be well placed to comply with syariah rules and guidance.

“This must be done in substance and not only in forms,” he explained. “Islamic banking must become a risk sharing platform with savers and not interest bearing loan with mortgages and foreclosures.

“More attention is needed on the true risk sharing basis of Islamic finance away from mere duplication of conventional norms of lending,” he noted.

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