Malaysia banking system

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Introduction

1.0 Introduction

According to Bank Negara Malaysia, Malaysia banking system is divided into 3 main groups which are; 1) monetary institution comprising the Central Bank (Bank Negara), commercial and Islamic financial institutions; 2) non- monetary institutions namely merchant banks, credit and insurance companies, and development banks; and 3) foreign banks representative offices and offshore banks. Prior to the 1997 financial crisis, Malaysia had thirty – seven commercial banks, forty finance companies and twelve merchant banks. However, after the financial crisis 1997, most of the banks has consolidation through mergers and acquisitions to strengthening of these financial institutions has result in thirty – five licensed commercial banks, thirty – one finance banks and twelve merchant banks.

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As to date, there are only twenty – two licensed commercial banks and fourteen merchant banks in Malaysia. (Shanthi Kandiah, 2009) (Table 1)

Financial Institutions

1997

1998

2009

Commercial banks

37

35

22

Finance Companies

40

31

0

Merchant banks/Investment banks

12

12

14

Table 1 : Number of Financial Institutions

However, among the twenty – two licensed commercial banks only nine of the commercial banks are local bank and the rest of thirteen commercial banks are foreign banks. From the nine local commercial banks out of eight banks listed in Bursa Malaysia are: Malayan Banking Berhad, Hong Long Bank Berhad, Public Bank Berhad, Affin Bank Berhad (under Affin Holding Group), Alliance Bank Berhad (under Alliance Financial Group Berhad),Ambank Berhad ( under AMMB Holding Berhad), Eon Bank Berhad (under Eon Capital Berhad) and lastly CIMB Bank Berhad. (under Bumiputra- Commerce Holdings Berhad) while Rhb Bank Berhad, is currently not listed in the Bursa Malaysia. (Table 2)

NO

NAME

Listed

Non-Listed

1.

Affin Bank Berhad (under Affin Holding Group)

x

2.

Alliance Bank Malaysia Berhad (under Alliance Group Berhad)

x

3.

AmBank (M) Berhad (under AMMB Holding Berhad)

x

4.

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