ENTRY OF FOREIGN BANKS WILL NOT BRING NEGATIVE EFFECTS, SAYS M'SIAN DEPUTY MINISTER

KUALA LUMPUR, Aug 2 (Bernama) -- The granting of new banking licences to
foreign commercial banks will not have negative effects on the operations of
local banks, including those offering Islamic banking.

Deputy Finance Minister, Dr Awang Adek Hussein, said this was because
local commercial banks were strong to face the challenges of a liberal
environment as a result of the banking reforms and efforts undertaken under the
Financial Sector Masterplan.

He said the local banks were also well-capitalised, committed to good
corporate governance, possessed internal structure and risk management which
were efficient and had various sources of incomes.

"Their strong capacities have enabled them to expand overseas and enjoy the
benefits of new business opportunities.

"All these have enabled the local banks to be ready to face competition,
locally and in the region," he said this in reply to a question by Senator Zamri
Yusuf at the Senate (upper house of the Parliament of Malaysia) here Monday.

Awang Adek said the granting of new banking licences to foreign banks aimed
to strengthen and improve economic and financial ties with other countries.

He said it would also strengthen Malaysia's position as a hub for various
international Islamic banking services and bring in foreign expertise and
technology needed to develop new products.

"It will also attract foreign investments and increase job opportunities for
the locals," he said.

He said as the government planned to set up a strong Islamic banking system
there was a need to offer more opportunities to set up enough Islamic banks in
the country.

"So, we cannot rely on one or two banks like Bank Islam or Bank Muamalat but
need to set up a system with enough banks to develop Islamic banking," he said.
-- BERNAMA