Malaysia Building Society Berhard (KLSE:MBSB) has submitted an application to Bank Negara Malaysia for approval of its proposed merger with Asian Finance Bank Berhard, putting non-bank lender MBSB within closer reach of obtaining full Islamic banking status. In a recent stock exchange filing, MBSB said it had submitted the application within the stipulated six-month time frame to "seek the approvals of Bank Negara and/or the Ministry of Finance, Malaysia". It said further announcements would be made upon receipt of Bank Negara`s decision.

Reportedly, the proposed plan involves MBSB buying AFB`s assets and liabilities in a deal that values the latter at a price-to-book value (PBV) of between 1.2 times and 1.5 times. It is understood that just two of AFB`s four Middle East shareholders Qatar Islamic Bank (Q.P.S.C.) (DSM:QIBK) (66.67%) and Global MENA Financial Assets Limited (6.67%) plan to exit, while the other two, RUSD Investment Bank Inc (16.67%) and Tadhamon International Islamic Bank (10%), want to stay on in the enlarged banking entity, a source said. As such, it is expected to be a deal that involves both cash and shares, with shares going to the shareholders that want to stay.