Tabung Haji bailout in 2018 averted massive deposit withdrawal, financial market crisis

Saturday 03 Oct 2026

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KUALA LUMPUR (July 31): Lembaga Tabung Haji (LTH) has described the recovery and restructuring plan implemented in 2018 as a necessary financial bailout to prevent the institution from becoming insolvent, saying that LTH would have otherwise faced the risk of a massive deposit withdrawal that could trigger a financial market crisis and undermine the country's economic stability.

It said the government's bailout enabled LTH to execute its recovery plan in 2018, thereby safeguarding depositors' savings and ensuring the institution's financial sustainability.

“The profit distribution, in light of the asset-liability gap exceeding RM10 billion as at end-2018, had the potential to trigger a run on deposits and force Tabung Haji to sell its assets at distressed prices to meet large and uncontrollable cash withdrawal requests from depositors,” LTH added in a statement on Friday.

According to LTH, the recovery plan successfully addressed investment losses amounting to RM12.6 billion, allowing the institution to return to a stronger and more sustainable financial footing, with profit distribution rate increasing from 1.25% in 2018 to 3.5% in 2025, while also rebuilding its reserves for a more stable future.

LTH added that, at the time, the government and LTH faced four options for implementing a recovery and restructuring plan within the tight timeframe leading up to the end of 2018.

They ultimately chose to sell underperforming and problematic assets to the government at a premium value to close the gap between assets and liabilities, thereby ensuring LTH remained solvent.

"A government-owned special purpose vehicle (SPV), Urusharta Jamaah Sdn Bhd (UJSB), purchased assets valued at RM9.7 billion for a total of RM19.9 billion to cover the existing deficit. This enabled a profit distribution for the 2018 financial year to be declared.

"This transaction was financed through two sukuk series issued by UJSB — backed by a government letter of support — with a profit rate of 4.05% and 4.1% per annum," LTH added.

Consequently, under the leadership of the chairman, the board of directors, and a professional, competent management team, LTH returned to a stronger and more sustainable footing through the implementation of strategic plans, reforms, and improved governance, all without government interference.

TH said its declared profit distribution rates improved and stabilised, with returns rising from 1.25% in 2018 to 3.25% in 2024 and 3.5% in 2025.

The institution noted that these profit distributions were determined after accounting for RM2.6 billion in impairment losses on problematic assets that could not be transferred to UJSB at the end of 2018 due to specific reasons.

"TH’s financial position is now stronger, and it has begun rebuilding reserves to ensure a more stable future.

"TH's recovery and restructuring plan had addressed investment losses totalling RM12.6 billion — comprising RM10 billion through the 2018 recovery plan and RM2.6 billion to be addressed in stages through end-2025," LTH said.

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