This transformation reflects the coming-of-age of the Islamic banking industry after more than two decades of development. The move grants legal status to the Islamic banking business of the new entity, which is accorded a licence for its operations under the Islamic Banking Act 1983. The underlying philosophy of the incorporation of an Islamic subsidiary is primarily aimed at further strengthening the institutional structure for Islamic banking business operations. The Islamic subsidiary will also be able to assimilate the developments in the regulatory and supervisory standards governing the lslamic banking operations. It is envisaged that greater strategic focus and resources as well as higher autonomy and governance will be accorded to the Islamic banking business. The Islamic subsidiary will be led by a chief executive and a board of directors solely dedicated for the Islamic bank. Placed under the commercial banking arm of the group, the Islamic subsidiary will continue to leverage on the synergies and operating infrastructures of the group, thus achieving cost optimisation for the Islamic subsidiary and the group as a whole. For bank customers, the Islamic banking products and services will continue to be available at the existing branches of the conventional commercial banks. Given that it is a subsidiary with a more focused vision and business strategies, the potential that can be unleashed for the Islamic subsidiary will enhance value to its stakeholders.
2  BIS Review 13/2005