MARC Ratings has placed its financial institution (FI) ratings of AA+/MARC-1 on Kuwait Finance House (Malaysia) Berhad (KFH Malaysia) on MARCWatch Developing. The rating action follows the announcement on July 31, 2024, by KFH Malaysia that it will voluntarily withdraw from the Malaysian market and wind down its banking business in the country.

MARC Ratings understands that the winding down of the Malaysian banking business is in line with KFH Group’s strategic review to focus on the Middle East region. The group had recently completed the acquisition of Bahrain’s largest bank, Ahli United Bank, making it the second-largest Islamic bank globally in terms of assets.

The rating agency had been rating KFH Malaysia since 2008 and had reaffirmed the rating on July 3, 2023. The rating had considered the strong support extended by Kuwait Finance House KSC (KFH) to its wholly-owned subsidiary, KFH Malaysia. The parent KFH carries a AAA public information rating from MARC Ratings, premised on its very high systemic importance as the largest bank in Kuwait and expectations of support from the Kuwaiti government. KFH is expected to facilitate the gradual winding down process by providing resources and liquidity support, if necessary. MARC Ratings will monitor the developments accordingly.