KUALA LUMPUR (Jan 10): Bank Negara Malaysia (BNM) has given Malaysian Industrial Development Finance Bhd (MIDF) the green light to begin merger talks with Al Rajhi Banking & Investment Corp, Kingdom of Saudi Arabia.

This confimed a The Edge Malaysia weekly report on Dec 24, 2018 that the two parties had held exploratory talks and had written in to the central bank asking for permission to commence discussions for a potential merger.

MIDF said today it has received a letter from BNM stating that the central bank has no objections for MIDF and its sole shareholder Permodalan Nasional Bhd to start negotiations with Al Rajhi Banking & Investment Corp, Kingdom of Saudi Arabia, on a proposed merger with Al Rajhi Banking & Investment Corp (M) Bhd.

In a statement, MIDF said the negotiations must be completed within three months from the date of BNM's letter.

"It should be noted that this should not be construed as implying that a final merger agreement will be reached or that BNM has approved the merger. MIDF will have to obtain prior approval from BNM or the Minister of Finance, with the recommendation of BNM, as the case may be, pursuant to the Islamic Financial Services Act 2013 and the Financial Services Act 2013 before entering into any agreement to effect the proposed merger.

"If an agreement is achieved, it will also be subject to various conditions, including all relevant legal requirements and the approval of all regulatory authorities involved, in both Malaysia and the Kingdom of Saudi Arabia," MIDF said.

MIDF said further announcements on the proposed merger will be made at the appropriate time as negotiations progress. In the meantime, business will continue as usual.

MIDF group managing director Datuk Charon Mokhzani said in the statement: "We look forward to having fruitful discussions with Al Rajhi Banking & Investment Corp, Kingdom of Saudi Arabia, and to a mutually beneficial outcome."

Bloomberg first reported on Dec 12 last year that MIDF was exploring a merger with Al Rajhi Malaysia in a bid to become a universal Islamic bank.