Unicorn International Islamic Bank, Malaysia's first international Islamic bank, plans to buy a 40 per cent stake in a local Islamic bank to boost its presence in the country.
"We hope to identify a good target in the next six to 10 months," chairman Datuk Vaseehar Hassan Abdul Razack said in an interview in Kuala Lumpur.
It may spend as much as US$200 million (S$287 million) on the purchase. Malaysia recently allowed foreign investors to buy up to 70 per cent of local Islamic banks.
Unicorn, which had failed to buy a stake in Bank Islam, the country's oldest Islamic bank, has been looking for a mid-sized institution since then.
The bank's current focus here is investment and corporate banking as well as treasury. It also prefers to offer private equity and asset management on an "opportunistic basis".
Corporate banking provides it with stable revenue growth compared with investment banking where revenue from arranging a couple of sukuk a year, yielding US$7 million to US$8 million, is more lumpy in nature, Vaseehar said.
Unicorn has plans to accelerate the activities of its treasury division in the short to near term, apart from corporate banking services which contribute 30 per cent of revenue.
The bank recorded its maiden profit of RM812,546 last year, after its first year of operations with an international bank licence.
It expects to triple its asset base this year, driven by investment and corporate banking activities. Its assets stand at US$122 million.
Unicorn may move its Bahrain-based global treasury office to Malaysia.
"Compared to Bahrain, the Malaysian money market is much more active and more sophisticated, which makes more sense to have the global treasury here."
It wants to develop US dollar treasury products in Kuala Lumpur and expand its three-man team housed at Menara Standard Chartered.
Currently, it is doing about US$220 million worth of treasury products.
As the first foreign bank to obtain a licence under the Malaysian International Islamic Financial Centre initiative, Unicorn can do a wide array of syariah-based banking business with foreigners in international currencies.
With an active treasury, it can take deposits as well as carry out money market transactions across the globe.
A billion-dollar US asset management company with an Islamic division has already shown interest in Unicorn's products.
Unicorn Bank, the first bank to introduce the wakalah deposit concept - a syariah-compliant product widely accepted by Gulf Cooperation Council member countries - is also keen to promote wa'ad, a foreign exchange forward contract.
"To make Malaysia an international Islamic hub, we need players to come and do non-ringgit cross-border transactions," Vaseehar said, adding that he was hopeful of developing an Islamic forex trading hub in Malaysia by early next year.