Negotiations on the merger between Bank Muamalat and Malaysia Building Society Bhd (MBSB) are still ongoing, said Khazanah Nasional Bhd managing director Azman Mokhtar.

The government investment arm holds a 30 percent stake in the Islamic bank and DRB-Hicom Bhd 70 percent.

Azman said Khazanah is not involved in the negotiations and would leave them to DRB Hicom as the major shareholder to decide on the bank’s future.

“The major shareholder is the one that will determine the outcome,” he told reporters after delivering his commemorative lecture to the Malaysian Institute of Certified Public Accountants members today.

He said once the negotiations are completed, Khazanah will decide if the outcome would suit the government’s strategic investment fund.

Azman, however, declined to say whether Khazanah would continue as a stakeholder of Bank Muamalat.

He said the bank is not a core business to Khazanah.

“Our core holding is in CIMB Bank, so Bank Muamalat is really a little bit of a spillover from the last financial crisis,” he said.

On Sept 30, Bank Negara Malaysia gave approval for the merger negotiations, which could pave the way for the creation of the country’s biggest standalone Islamic bank.

The combined asset size of the two financial entities are estimated to be RM60 billion, higher than the RM54 billion asset size of BIMB Holdings Bhd, the holding company of Bank Islam Malaysia Bhd, Malaysia’s largest full-fledged Islamic bank.

- Bernama