Sumitomo Mitsui Banking Corp. said Monday it has launched Shariah-compliant Islamic finance in Malaysia.
The core banking unit of Sumitomo Mitsui Financial Group Inc. has obtained a license for foreign currency-based Islamic finance services in the country, which promotes Islamic finance under a national policy. SMBC hopes to use a fully owned local subsidiary as a key operational base for the whole of Southeast Asia, where fund demand is strong, thanks to growth in the economy and population.
The local subsidiary, Sumitomo Mitsui Banking Corp. Malaysia Bhd, is starting financial services in dollar and other currencies that are fully compliant with Shariah, which bans financial transactions involving interest payments and acceptance.
The banking group aims to find clients among local companies and Japanese firms participating in natural resources and infrastructure development projects, officials said. Japanese banks are able to handle Islamic finance following a 2008 law revision. A British unit of SMBC in 2012 led the formation of a Shariah-compliant $750 million syndicated loan program for an airport project in Saudi Arabia. SMBC will be the first Japanese bank to have an Islamic finance operational base both in Europe and Asia.