ICBC said to get Malaysia bank permit

 

Malaysia will issue a banking permit to Industrial and Commercial Bank of China Ltd as it seeks to boost foreign direct investment, according to two people with knowledge of the matter.

Malaysia’s central bank and government are in the process of completing the approval for ICBC to operate in the country, one of the people said, declining to be identified because he isn’t authorised to speak to the media. ICBC spokesman Xie Taifeng said he was unaware of any pending announcement.

Beijing-based ICBC, the world’s most profitable bank, would become the first foreign lender to receive a banking permit in Malaysia in nine years. Prime Minister Datuk Seri Najib Razak said in April he would give out as many as nine new licences to overseas financial institutions as the country liberalises its banking industry.

Malaysia will issue three licences to foreign banks in 2011, the first since Bank of China Ltd, based in Beijing, received a permit in 2000, Najib said April 27. The central bank will also issue two Islamic banking licences this year, another two to sell Islamic insurance, and as many as two specialised permits to overseas commercial banks, he said at the time.

Inviting foreign banks is part of Najib’s plan to increase the proportion of Malaysia’s gross domestic product derived from services to 60 per cent from 55 per cent in 2008, and wean the country off its dependence on export revenue. Malaysia’s US$195 billion economy may shrink 3 per cent this year, the first contraction in a decade, as exports slump, Najib said October 23.

The government may announce the approval for ICBC to start its business in Malaysia, which will include setting up four branches, during Chinese President’s Hu Jintao’s two-day visit to Kuala Lumpur next week, the Straits Times reported today, citing unidentified financial executives and government officials.

Bank Negara Malaysia, the country’s central bank, declined to comment, according to an official. -- Bloomberg