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A Case Study: Maybank Singapore Islamic Banking

2049 words - 9 pages

1. Introduction
Malayan Banking Berhad (“Maybank”), a state-owned Malaysian lender and one of the top five banks within the Association of Southeast Asian Nations (Business Monitor International, 2014), expanded its operations in Singapore in 1960 to “be a regional financial services leader” by “humanising financial services across Asia” (Maybank, 2014). Maybank Singapore is Group’s largest overseas unit in terms of assets. Maybank Singapore contributes approximately 60% to the Group’s total international loan portfolio (Arshad, Ahmad, Mustapa and Mohtar, 2012).
Maybank Singapore which operates via Islamic windows was recently named by Global Finance (2013) as World’s Best Islamic Financial ...view middle of the document...

This will be one of our topics of discussion.


3. Legal Documentation – Harmonising The Two Laws
The role of lawyers, whether in-house or external, is to ensure that the legal documentation for banking transactions is legally binding with respect to the relevant jurisprudence, protecting the interests of both contracting parties. Where complicated corporate loans and financing facilities are concerned, the legal documentation is usually customized on a case-to-case basis.
As legal counsels in Singapore are more familiar with the local law rather than Shariah law, there seems to be a problem in legal documentation of Islamic financial transactions - the drafting process tends to create a bottleneck in the deal completion. As a result, this makes both the bank and customers very unhappy. As for the case of the Islamic vessel financing involving Atlantic Navigation and Maybank, the legal documentation takes more than 6 months to complete, whereas a normal conventional loan facility will take less than 3 months for the lawyers to complete the legal work.
A SWOT analysis as per Appendix C revealed that Maybank Singapore has an inherent weakness – due to shortage of local talent, legal counsels in Singapore are still unable understand the law of contract as defined under Shariah and its various requirements or appreciate contract of sale and issues of Shariah non-compliance. As a result, there are confusions, several unnecessary discussions and redrafting of documentation.

4. Operations – Internal Stakeholders & External Customers
Another topic for discussion is the Islamic banking businesses which has many challenges in Singapore.
Internal stakeholders are very difficult to please. This is probably attributed to the following reasons:
• They are not confident of Islamic Banking operationalising in Singapore.
• They are worried that Islamic Banking products may cannibalize the conventional products within the bank.
External customers, though initially are very excited to know about Islamic financing facilities available in Singapore, become upset when they discovered that the Islamic products are structurally not as straightforward as a conventional loan. This matter worsens as additional paperwork and administration is involved, resulting in higher legal costs.

5. Strategy – To Work For The Future
Maybank can adopt the Blue Ocean Strategy to remain competitive in the Singapore Islamic Banking industry. The purpose is to “not to out-perform the competition in the existing industry, but to create new market space or a blue ocean, thereby making the competition irrelevant” (INSEAD, 2014), The four-actions framework is depicted in Appendix H.
Whatever the case may be, the student opines that, for IsB in Maybank Singapore to remain competitive within the next 3 to 5 years, IsB needs to adopt the integration strategy - “a business level strategy that successfully combines both differentiation and cost-leadership strategies” (Rothaermel, 2013, p 155)....

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