Alliance Islamic Bank mulls RM180m sukuk to strengthen capital structure

-A +A

KUALA LUMPUR (Sept 14): Alliance Islamic Bank Bhd, a unit of Alliance Financial Group Bhd (AFG), plans to issue up to RM180 million worth of sukuk, as part of its plan to raise its capital structure.

In a filing with Bursa Malaysia, AFG said the subordinated sukuk is intended to qualify as Basel III-compliant regulatory capital, which is in accordance with the Bank Negara Malaysia's (BNM) Capital Adequacy Framework for Islamic Banks.

"Alliance Islamic Bank will utilise the proceeds for its general banking, working capital and other corporate purposes, including the refinancing of any financing incurred or any financing instruments," AFG said in a Bursa Malaysia filing today.

AFG said it had on Aug 4 received approval from BNM to establish the sukuk programme, and has also lodged necessary documentations with the Securities Commission Malaysia.

AFG, Malaysia's smallest lender, said the sukuk was arranged by its wholly-owned Alliance Investment Bank Bhd, which is also the sister firm to Alliance Islamic Bank.

Incorporated in 1966, AFG was the result of the amalgamation of seven financial institutions in 2001.

Singapore's sovereign wealth fund Temasek Holdings Pte Ltd is the largest controlling shareholder with a 29.07% stake, followed by Langkah Bahagia Sdn Bhd with a 29.06% equity interest.

Listed on the Main Market since July 1979, shares in AFG have been suspended since Sept 12 to facilitate its capital reduction and repayment exercise.

The banking stock was last traded at RM3.87, giving a market capitalisation of RM5.99 billion.