This article first appeared in The Edge Financial Daily on July 17, 2018

KUALA LUMPUR: Koperasi Angkatan Tentera Malaysia Bhd (KAT) has not abandoned its plan to become a full-fledged Islamic cooperative bank, which it has been pursuing since 2002.

“We are now behaving more like a financial institution. We also have in place a core banking system,” the thrift and loan cooperative’s chairman Datuk Zulkiflee Mazlan told reporters after meeting with the Council of Eminent Persons yesterday.

In September 2015, chief executive officer Datuk Ahmad Zahudi Salleh told The Edge Financial Daily that KAT, which had financing assets of RM2.97 billion as at end-2017, aimed to be the third cooperative bank after Bank Kerjasama Rakyat Malaysia Bhd and Koperasi Bank Persatuan Malaysia Bhd.

In its preparation to become a full-fledged Islamic cooperative bank, Zulkiflee said KAT has employed around 80 bankers to transform the cooperative entity.

“Our plan is still on the move, and we await the higher authority to make a decision on this,” he added.

Zulkiflee said KAT is armed with sufficient liquidity to become a full-fledged cooperative bank with a focus on army personnel, which is expected to be within the context of development financial institution.

KAT has shareholders’ funds in excess of RM2.3 billion, higher than Bank Negara Malaysia’s (BNM) minimum capital requirement of RM100 million.

He said the final nod for KAT to become a bank will come from the Malaysia Co-operative Societies Commission (SKM), which will include an indirect green light from BNM.

“We think we are ready to become a bank. But at the end of the day, we are only ready to be a bank if the regulators say so,” he added.

When asked about the factors that have been delaying KAT’s approval to become a bank, Zulkiflee said: “When you talk about becoming a bank, the question in their mind would be, ‘Are we fully prepared to become one?’”

Zulkiflee also said the two regulators, SKM and BNM, will naturally voice their concerns over whether KAT will become a successful bank.

As to whether the market, which is flushed with 27 commercial local and foreign banks, can absorb a new entry player, Zulkiflee said: “Yes.”

“There are many other areas that are under-tapped and we see great opportunities in this segment,” he added.

For the financial year ended Dec 31, 2017, KAT posted a pre-tax profit of RM204.7 million on gross revenue of RM320.03 million.