FACTBOX-Malaysia's financial sector liberalisation

(Reporting by Liau Y-Sing and Julie Goh; Editing by DavidChance)

Malaysia on Monday announced new measures to boost the country's financial
services sector, allowing greater foreign stakes in investment
banks and insurers, but keeping limits on commercial banks.

Following are the liberalisation measures as detailed by
the central bank. For related story click on [ID:nKLR459140]

Issuance of new licences

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- Up to two new Islamic banking licences will be given in
2009 to foreign firms to set up banks with paid-up capital of
at least $1 billion;

- Up to two new commercial banking licences will be given
in 2009 to foreigners that have specialised expertise to
address gaps in the financial sector such as construction,
agriculture and infrastructure;

- Up to three new commercial banking licences will be
offered in 2011;

- Up to two new family Islamic insurance licences will be
granted in 2009.

Increase in Foreign Equity Limits

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- Existing domestic Islamic banks can enter into
partnerships with foreign players through an increased foreign
equity limit of up to 70 percent. These banks will be required
to maintain a paid-up capital of at least $1 billion;

- Foreign equity participation in investment banks,
conventional and Islamic insurers will be increased to a limit
of up to 70 percent;

- A higher foreign equity limit beyond 70 percent for
insurance companies will be considered on a case-by-case basis
for players who can facilitate consolidation and
rationalisation of the insurance industry.

- However there was no move on the 30 percent limit on
foreign ownership of commercial banks
Operational flexibilities
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- Locally-incorporated foreign commercial banks can
establish up to ten microfinance branches. Further branches
will be considered based on the effectiveness of these branches
in serving microenterprises;

- Locally-incorporated foreign commercial banks can
establish up to four new branches in 2010 based on a
distribution ratio of 1(market centre): 2(semi-urban):
1(non-urban)

- Locally-incorporated foreign insurance companies and
takaful operators are allowed to establish branches nationwide
without restriction;

- The restriction for locally-incorporated foreign insurance
companies and takaful operators to enter into bancassurance/
banctakaful arrangements with banking institutions is now
lifted;

- Banks, insurance and Islamic insurance firms can employ
specialist expatriates;

- Offshore banking institutions licensed by the Labuan
Offshore Financial Services Authority that meet the
predetermined criteria can have a physical presence onshore
from 2010.

--Reuters