Asia bank capital series: why Malaysia hasn’t yet seen a Basel III-compliant sukuk

Author: Ashley Lee | Published: 13 Nov 2013
  • Although Malaysia is considered the leading Islamic finance centre, its Islamic banks have yet to issue a Basel III-compliant sukuk;
  • Banks in the GCC have already issued Basel III-compliant sukuk but loss absorption mechanisms are not required in those jurisdictions. Malaysia’s Bank Negara is requiring loss absorption mechanisms to be contractually included in both shariah-compliant and conventional issuances;
  • It is unclear how shariah-compliant loss absorption mechanisms will be structured, and whether they will comprise write-downs or conversions into equity;
  • A commercial consideration is that Islamic banks in Malaysia are well capitalised and are not in need of regulatory capital, and therefore it is unclear whether they will look to Basel III-compliant sukuk in the near future.

Although Malaysia is the largest Islamic finance market in the world, its...



close Register today to read IFLR's global coverage

Get unlimited access to for 7 days*, including the latest regulatory developments in the global financial sector, updated daily.

  • Deal Analysis
  • Expert Opinion
  • Best Practice


*all IFLR's global coverage published in the last 3 months.

Read IFLR's global coverage whenever and wherever you want for 7 days with IFLR mobile app for iPad and iPhone

"The format of the Review has changed over the years; the high quality of its substantive content has not."
Lee C Buchheit, Cleary Gottlieb