TOKYO -- The Bank of Tokyo-Mitsubishi UFJ has provided an Islamic syndicated loan to a Malaysian affiliate of Saudi Arabia's state-owned telecom company, Saudi Telecom. The ringgit-based loan amount is about 41.7 billion yen ($353 million).
Islamic finance bans the charging of interest, and it is customary to supply funds using palm oil transactions. BTMU is the first Japanese bank to act as an agent bank for a syndicated loan in Malaysia. The loan will be provided with HSBC and Standard Chartered Bank of the U.K.
Japanese banks in Malaysia mostly provide loans to Japanese companies operating in the country, lagging behind European and U.S. financial institutions in financing non-Japanese companies. BTMU aims to expand operations in the country through Islamic finance.
BTMU has extended foreign-currency Islamic loans in Malaysia since 2008, and ringgit-based Islamic loans since 2014.
The ratio of Islamic finance to total loans in Malaysia rose to about 30% at the end of 2017, from 17% at the end of 2009.