Malaysia-based Malayan Banking is planning to convert its Indonesian subsidiary PT Bank Maybank Indocorp (BMI) into an Islamic bank and reduce its share capital.

The move is part of the Indonesian central bank Bank Indonesia’s regulations involving a change in business operations.

Malayan Banking feels that Islamic banking has huge potential and this move will help it to tap the market in the world’s most populous Muslim nation.

The capital reduction plan is expected to bring BMI’s share capital down to MYR300.7m from MYR346.8m. The exercise will eliminate BMI’s retained losses that totaled MYR50.1m last year.

Maybank, in a statement, said: “This exercise is undertaken to enable BMI to make a fresh start under its new business activity of Syariah banking, with a balance sheet that reflects fair value, without being burdened by the accumulated losses.”