Malaysian bank in sale talks with Kuwait

Malaysia's plans to fashion itself as a global Islamic finance hub took another step to fruition on Thursday, after state-controlled RHB Bank announced it would start talks to sell itself to Kuwait Finance House.

RHB became the property of Malaysia's Employees Provident Fund (EPF), after the state pension fund controversially emerged the $3.6 billion winner of a March takeover battle for the RHB group, beating out rival bids from Kuwait Finance and small lending group EON Capital.

RHB's announcement on Thursday comes just five months after EPF chief executive Azlan Zainol said he plans to find suitable partners for RHB by 2008, as it is itself unsuitable to run a bank.

The EPF has said it wants at least two partners to help build value in RHB, with their contribution either in strategy, Islamic banking, financial strength or risk management.

RHB Capital, Malaysia's fourth-largest lending group, said on Thursday its wholly owned RHB Bank unit would start talks to sell its branches, assets and liabilities to Islamic bank Kuwait Finance House. No financial details were given.

RHB's announcement confirms months of speculation that the EPF wants a tieup with Kuwait Finance, which says it has a consortium of Islamic investors that aim to transform the RHB group into the world's largest Islamic bank.

Kuwait Finance's plans dovetail with Malaysia's own designs on becoming a global hub for Islamic finance: the Southeast Asian nation is already home to the world's largest Islamic bond market and wants to keep growing, as regional competition such as from neighbouring Singapore hots up.

The move comes after RHB Bank obtained mandatory approval from the Malaysian central bank to commence the talks with Kuwait's second-largest lender by market value, RHB added.

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