Malaysia Debt Ventures Berhad (MDV), a wholly-owned subsidiary of the Minister of Finance (Incorporated) collaborated with Standard Chartered Malaysia to engineer a first- of-its-kind replicable bare custody Islamic trust structure that will benefit development financiers such as MDV.
The trust structure, jointly created by MDV and the Bank, provides a platform which allows for enhanced administration, better governance, full control and visibility over financing-related accounts, therefore significantly reducing operational risks for financial institutions in the country. It is a fully Shariah-compliant solution that leverages on the Bank’s wholly owned subsidiaries, SCBMB Trustee Berhad and Standard Chartered Saadiq Berhad.
The technology financier also appointed Standard Chartered as one of its core cash management banks and financiers on the back of the collaboration. In addition, Standard Chartered also extended MDV a Shariah-compliant revolving credit facility for MDV to finance its mandated customers. This is expected to diversify the sources of funding for MDV’s operations beyond government guaranteed sukuk that has been issued by MDV.
Nizam Mohamed Nadzri, Chief Executive Officer of MDV, said: “We are pleased that this public-private partnership has resulted in increased efficiency and transparency for MDV. This is what the trust structure aims to achieve — to enable organisations such as MDV to strengthen the level of control over their financing accounts, enhance their governance, improve their visibility and to advocate full transparency across related financing that they offer. At the same time, the revolving credit facility extended by Standard Chartered will boost MDV’s capacity to fund small and medium enterprises (SMEs) in the technology and green sectors.”
Abrar A. Anwar, Managing Director and Chief Executive Officer, Standard Chartered Malaysia said: “We are proud to have jointly created this solution with MDV in support of development financiers in Malaysia. We strongly believe that by leveraging the expertise within MDV and combining the Bank’s trustee arm capabilities together with our state-of-the-art channels in Standard Chartered Saadiq Berhad, this highly replicable solution will pave its way to help other development financiers in and out of Malaysia improve governance, visibility and control over their portfolios. Being a first in the industry, this solution can be
customised to our clients’ needs and be expanded to other development financiers across the region, thus helping more organisations improve processes and circumvent risk parameters among client portfolios.”