For the last 12 years, someone somewhere has banged on about the need for an Islamic megabank. I remember a dusty meeting room in Bahrain back in 2004 or 2005 with a team of weathered and wealthy Islamic bankers telling a room full of sceptical journalists that such a bank was on the cusp of being born. Many of the journalists, and even more of the photographers, were more interested in the sandwiches and sticky buns than the mega bank. That it still hasn’t happened speaks volumes, but it doesn’t stop people jumping on the bandwagon from time to time and ruminating afresh.
The latest person to buy a ticket for the bandwagon is Malaysian prime minister Najib Razak. CIMB Holdings, RHB Capital and the Malaysia Building Society has now received approval from Bank Negara Malaysia to proceed with merger talks to make such a bank.
On the one hand are those who argue for the need for larger banks to play a part in the biggest global sales of Sukuk. But on the other hand, there are those who ask if this is the right time? The mantra of the moment is too-big-to-fail and bigger banks needing more and better quality capital reserves in order to be able to weather the next big market rout when it happens, as it will.
It’s just nevvah gonna happen, captain.
But let’s imagine it did. Would the bank come from Asia? Or would it be more likely to come from the Gulf where the wealth is?
The reality is that the likelihood of it happening at all are remote. There are too many impediments, not least the egos that would inevitably get in the way. And the compliance issues. And the oversight issues. And the capital adequacy issues. And the human capital issues. Who would head the megabank? Answers on a postcard, please…