A Bank Run in the works?

Another Brick in the Wall

It is already mid-March and there is no inkling of a hibah (equivalent to Islamic dividend) announcement forthcoming. Since the last posting, “Tabung Haji: Sins and Silliness“, one source told yours truly with confidence, it will be coming in mid-March.

Since it is already the 15th, it will likely be extended to the end of March. However, an equally reliable source that has been feeding unexpected developments on TH claimed it will be in April.


Word circulating among bankers is that TH has been going around town seeking for a revolving credit (RC). Before BENARcom.my starts making any accusations and personal attacks, be reminded that The Star Online started it.

Getting ready money is one of three ways described in an article in the US National Public Radio portal on how to stop a bank run.

If the information is true, is the TH new management anticipating a “bank run”? Why? Is there negative news for the hibah for 2018?

Finally, are they actually anticipating a bank run or has it been pre-planned?

Bank run

According to Investopaedia, “A bank run occurs when a large number of customers of a bank or other financial institution withdraw their deposits simultaneously over concerns of the bank’s solvency.”

As more people withdraw their funds, the probability of default increases, prompting more people to withdraw their deposits. In extreme cases, the bank’s reserves may not be sufficient to cover the withdrawals.”

In this case, TH is not a bank and thus it is not a “bank run” per se.

However, the definition of a bank can be loosened up to mean a financial institution and Bank Negara Malaysia has categorised TH as a non-Banking financial institution.

Last week, this blogger had the pleasure of meeting up with an old hand and expert on Islamic banking. He asked what do we see is going to happen to TH.

Our answer is the end game could be to close up the institution in a manner similar to the Malaysian Airlines due to the inability of the perpetually incapable Khazanah to keep cutting costs down and to reduce capacity to generate income.

The elderly man understood immediately and agreed. He explained that the unnecessary removal of about RM20 billion of assets from the slightly more than RM70 billion portfolio together with plans by CEO Dato Zukri Samat and Datuk Zaiton Hasan will reduce the capacity of TH.

To restructure the portfolio mix towards “only fix income and risk averse” investments reduces returns to depositers. It is similar to cutting cost and turning MAS into low “caste” carrier.

Like MAS, TH will reduce its capacity to invest and expand its investment and economic activities. It will be losing more depositers to other fund management services like unit trust.

As originally intended by BNM at the wishes of commercial Islamic Banks, halal seeking deposits will flow to Islamic Banks.  A “Bank run” will surely hasten the process. So it can be suspected as having been pre-planned.

The blame should go to the accounting “genius” Zaiton for colluding with Lim Guan Eng and one could speculate that the reward was the Bank Pembangunan chairmanship.

A Chinese friend told yours truly that Guan Eng insisted on TH to sort their own problems. He intentionally refused to let Ministry of Finance commit any assistance despite provisions in Sections 22 to 24 of the Tabung Haji Act.

Tony Pua already said Khazanah and PNB will be on cheap sale. TH’s short term problem is a blessing on a silver platter.

Subsequently, TH will shrink further and further like MAS to eventually be reduced to only a government agency handling Haj quota and annual operations.

It is Tan Sri Dr Zeti Akhtar Aziz’s smart move to destroy the legacy of her father and betray the interest of the Muslims.

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