RHB became the property of Malaysia's Employees Provident Fund (EPF), after the state pension fund controversially emerged the US$3.6 billion (S$5.5 billion) winner of a March takeover battle for the RHB group, beating out rival bids from Kuwait Finance and small lending group EON Capital.

RHB's announcement yesterday comes just five months after EPF chief executive Azlan Zainol said he plans to find suitable partners for RHB by next year, as the pension fund is itself unsuitable to run a bank.

The EPF has said it wants at least two partners to help build value in RHB, with their contribution either in strategy, Islamic banking, financial strength or risk management.

RHB Capital, Malaysia's fourth-largest lending group, said yesterday that its wholly owned RHB Bank subsidiary would start talks to sell its branches, assets and liabilities to Kuwait Finance, an Islamic bank. No financial details were given.

RHB's announcement confirms months of speculation that the EPF wants a tie-up with Kuwait Finance, which says it has a consortium of Islamic investors that aim to transform the RHB group into the world's largest Islamic bank.

Kuwait Finance's plans dovetail with Malaysia's own designs on becoming a global hub for Islamic finance: The South-east Asian nation is already home to the world's largest Islamic bond market and wants to keep growing, as regional competition such as from neighbouring Singapore intensifies.

The move comes after RHB obtained mandatory approval from the Malaysian central bank to commence the talks with Kuwait's second-largest lender by market value, RHB added.

REUTERS