KUALA LUMPUR (Aug 9): Bursa Malaysia Bhd encourages listed banking companies to look into shariah-compliant instruments, so that their Islamic banking arms can be listed on the stock exchange.

Bursa chairman Tan Sri Abdul Wahid Omar said challenges persist in listing Islamic banks, as shariah-compliant equity instruments in the financial service sector remain limited.

He said banks such as Maybank, CIMB, Public Bank and RHB Bank, which are listed on Bursa Malaysia, remain categorised as conventional despite a portion of their business being shariah-compliant.

“Maybank, for example, has 60% of [its] total financing in Malaysia, [and] is already shariah-compliant,” Abdul Wahid told reporters during the Invest Shariah Conference 2023, titled "Navigating the Shariah Horizon: Diversifying Investment Frontiers", on Wednesday (Aug 9).

Abdul Wahid also said the challenge with listing banks’ Islamic branches is due to their leverage model, which means their Islamic banking business is leveraging their current branch network, including their management.

“So when you are listed separately, there will be a presence of minority shareholders, then you have issues of third party transactions,” he said.

He mooted the possibility of other instruments which will enable a portion of equities to be traded on the shariah-compliant side as a source of payments.

“So that is something we have to talk about... the need to think about designating some of the shares as shariah-compliant shares [was mentioned in the past]. You earmark and ring fence income from Islamic banking operations as a source of payments [for] dividends, it is something to explore further," Abdul Wahid added.