The Maybank Successfully Completes Issuance of RM1.8 Billion Subordinated Sukuk Murabahah
Malayan Banking Bhd (Maybank) has successfully completed the issuance of RM1.8 billion in Subordinated Sukuk Murabahah, marking a significant step within its larger RM30.0 billion Sukuk programme.
This major issuance, reported in a recent Bursa Malaysia filing, is strategically designed to ensure the funds are applied exclusively for Shariah-compliant purposes, adhering strictly to Islamic financial principles.
The proceeds from the Subordinated Sukuk Murabahah will primarily be used to fund the issuer’s investments in both ringgit-denominated and foreign currency-denominated Islamic financial instruments.
These instruments must be approved by either Bank Negara Malaysia’s Shariah Advisory Council or the Securities Commission Malaysia’s Shariah Advisory Council, providing the necessary governance and compliance oversight.
The remaining funds are also earmarked for supporting the Islamic business activities of Maybank’s subsidiaries and its overseas branches, in addition to being used for any other general Shariah-compliant business activities undertaken by the issuer.
This ensures a comprehensive and fully compliant utilization of the capital across the bank’s diverse operations.
The successful issuance underscores Maybank’s commitment to Islamic finance and its ability to raise substantial capital in adherence to global Shariah standards, further solidifying its position as a leader in the sector.
Strategic Capital Raising and Shariah Compliance
The RM1.8 billion subordinated Sukuk Murabahah is not only a funding mechanism but also a crucial tool for Maybank’s regulatory capital management, qualifying as Tier 2 capital.
The RM1.8 billion Subordinated Sukuk Murabahah is structured to qualify as Tier 2 capital for Maybank, in full accordance with Bank Negara Malaysia’s rigorous Policy Document on Capital Adequacy Framework (Capital Components), which was most recently issued on June 14, 2024.
This qualification is essential for strengthening the bank’s regulatory capital base, enhancing its financial resilience, and supporting its balance sheet growth in line with international banking standards.
The structure of the Sukuk Murabahah features a 12-year tenure on a 12 non-callable 7 basis, meaning the instrument is designed to mature on August 28, 2037, but includes a provision that allows the issuer to redeem it early after the seventh year.
This specific feature provides Maybank with necessary flexibility in managing its long-term funding costs and capital structure.
The use of the Murabahah structure—a cost-plus-profit arrangement that is one of the most common and accepted structures in Islamic finance—guarantees that the entire transaction remains fully compliant with Shariah principles throughout its lifetime.
The strategic purpose of this capital injection is to ensure the bank has the necessary reserves to support future growth in its Islamic financial services and continue to serve its expanding base of customers seeking Shariah-compliant banking solutions.
Expansion of Islamic Financial Activities
The proceeds will facilitate the expansion of Maybank’s Islamic business footprint, both domestically and through its substantial network of subsidiaries and international branches.
A key objective for the use of the proceeds is the significant funding of Islamic business activity across Maybank’s extensive network of subsidiaries and overseas branches.
This targeted funding will enable these entities to grow their Shariah-compliant offerings, ranging from corporate banking and retail financing to treasury products.
By directing capital to these Islamic operations, Maybank is reinforcing its strategy to capture a larger share of the rapidly expanding global Islamic finance market.
The investments funded by the Sukuk will be placed into Islamic financial instruments, ensuring that the bank’s asset base remains true to its ethical and religious commitments.
Furthermore, the Sukuk issuance is part of a much larger RM30.0 billion Sukuk programme, signaling the bank’s intention to continue relying on this form of Shariah-compliant capital raising for its long-term strategic needs.
This multi-billion-ringgit program allows Maybank to efficiently access capital markets as needed, providing a robust and scalable platform for funding future growth initiatives and maintaining optimal regulatory capital ratios.
