Labuan Banking - Banking

We are at the forefront of banking, private wealth, funds and capital markets.

Labuan IBFC’s suite of banking services are available in conventional, Islamic and digital forms. The range of banking services include project and infrastructure funding, structured borrowings, trade and export financing, treasury services and financial advisory. A Labuan bank can be operated as a branch or subsidiary and can establish offices in other part of Malaysia other than in Labuan to facilitate their businesses.

Labuan banking is defined as:

The business of receiving deposits on a current account, deposit account, savings account or any other account as may be specified by Labuan FSA
Labuan investment banking business
Labuan financial business
Labuan Islamic banking business, or
Such other business as Labuan FSA may specify, with the approval of the Minister of Finance, in any currency (including in Malaysian Ringgit where permitted under the Financial Services Act 2013 or such other relevant law in force).

key highlights

61 number of banks in 2020

Total customer deposits increased by 7.8% to USD8.6 billion in 2020
Loan exposure by region in 2020: Asia and The Pacific (75.2%), Europe (15.2%), America (4.4%), Far East (3.6%) and Middle East and Africa (1.6%)
USD49.4 billion of assets in 2020

View list of Labuan Banks and Investment Banks

Entry Requirements
Application Requirements
Operational Requirements
Fees

Entry Requirements
An applicant should meet the following minimum eligibility criteria:

Must be a bank or financial institution
Possesses a sound track record
Accorded a good credit rating by acceptable rating agencies
Supervised by a competent regulatory authority; and
Conforms to generally accepted standards of international banking practices or the Bank for International Settlements (BIS), as the case may be.
Application Requirements
A letter of awareness from a competent regulatory authority that supervises the applicant's shareholder/head office.
A letter of guarantee from the applicant's shareholder or an undertaking from the head office.
Business plans inclusive of three years' financial projections of the applicant.
Certified true copy of the Memorandum and Articles of Association of the applicant.
Certified true copy of the resolutions of the board or minutes of the general meeting, which approve the applicant to apply for a licence.
Copy of the audited annual accounts of the applicant's shareholder/head office for the three preceding years.
Applicant's corporate profile, which includes:
The name, place and date of establishment of the applicant.
The names, addresses, qualifications and experience of the directors and officers responsible for the overall management of the affairs of the applicant.
The name and address of each member who holds 10% or more of the voting shares of the applicant.
Declaration by the applicant on the probity of its directors and officers who are responsible for the management of the applicant; and
Any other information relevant to the application.
Operational Requirements
Maintain a physical presence in Labuan.
Every director or principal officer (PO) of a Labuan bank must be fit and proper persons and shall not be subject of any adverse report from any reliable sources. The appointment of a director or PO of a Labuan bank must obtain prior approval from Labuan FSA.
Comply with the statutory requirements under the Labuan Financial Services and Securities Act 2010.
Comply with the prudential and reporting requirements issued by Labuan FSA.
Adhere to any other requirements issued by Labuan FSA from time to time.
Meet certain pre-determined criteria, should it prefer to co-locate to any other parts of Malaysia.
Fees

All licensees are required to pay to Labuan FSA annual licence fees on or before 15 January of each year:
Type of fees
Amount
Annual Fee
RM100,000
USD30,000
Marketing Office Fee
RM7,500
USD2,500
Co-Located Office Fee
RM10,000
USD3,500

Entry Requirements
An applicant should meet the following minimum eligibility criteria:

Must be a bank or financial institution
Possesses a sound track record
Accorded a good credit rating by acceptable rating agencies
Supervised by a competent regulatory authority; and
Conforms to generally accepted standards of international banking practices or the Bank for International Settlements (BIS), as the case may be.
Application Requirements
A letter of awareness from a competent regulatory authority that supervises the applicant's shareholder/head office.
A letter of guarantee from the applicant's shareholder or an undertaking from the head office.
Business plans inclusive of three years' financial projections of the applicant.
Certified true copy of the Memorandum and Articles of Association of the applicant.
Certified true copy of the resolutions of the board or minutes of the general meeting, which approve the applicant to apply for a licence.
Copy of the audited annual accounts of the applicant's shareholder/head office for the three preceding years.
Applicant's corporate profile, which includes:

The name, place and date of establishment of the applicant.
The names, addresses, qualifications and experience of the directors and officers responsible for the overall management of the affairs of the applicant.
The name and address of each member who holds 10% or more of the voting shares of the applicant.

Declaration by the applicant on the probity of its directors and officers who are responsible for the management of the applicant; and
Any other information relevant to the application.
Operating Requirements
Maintain a physical presence in Labuan.
Every director or principal officer (PO) of a Labuan bank must be fit and proper persons and shall not be subject of any adverse report from any reliable sources. The appointment of a director or PO of a Labuan bank must obtain prior approval from Labuan FSA.
Comply with the statutory requirements under the Labuan Financial Services and Securities (Amendment) Act 2022 (Act A1654).
Comply with the prudential and reporting requirements issued by Labuan FSA.
Adhere to any other requirements issued by Labuan FSA from time to time.
Meet certain pre-determined criteria, should it prefer to co-locate to any other parts of Malaysia.
Fees
All licensees are required to pay to Labuan FSA annual licence fees on or before 15 January of each year:
Type of fees
Amount
Annual Fee
USD30,000
Marketing Office Fee
USD2,500
Co-Located Office Fee
USD3,500

Labuan Islamic Banking Window

The setting up of an Islamic banking window by a Labuan bank under the Labuan Financial Services and Securities (Amendment) Act 2022 (Act A1654) does not require a separate licence and there is also no additional licence fee involved. A Labuan bank may submit the application for approval with the following documents:

Certified true copy of board resolution pertaining to the proposed establishment of an Islamic banking window.
Business plan inclusive of three years' financial projections.
Information on its own internal Shariah Advisory Board (SAB).

Additional Incentives

Under the Malaysia International Islamic Financial Centre's (MIFC) initiative, the Islamic divisions of Labuan banks are given greater flexibility as follows:

Exemption from maintaining physical presence in Labuan. The Islamic divisions of Labuan banks may open operations offices anywhere in Malaysia, subject to consideration by Labuan FSA.
No limitation on the staffing and number of operations offices to be opened outside Labuan.
The operations offices are to conduct Islamic financial business in non-Ringgit currencies and deal mainly with non-residents as per Labuan legislation.
Dealings with residents in non-Ringgit transactions are allowed as permitted under the current foreign exchange administration policies.

Governing Legislation, Related Guidelines and Circulars

For the latest governing legislation, related guidelines and circulars, please go to labuanfsa.gov.my

List of Labuan Banks and Investment Banks

For the latest list of Labuan Banks and Investment Banks, click here.
This list was updated on 22 Nov 2024 and does not reflect real-time data.

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FAQs

1. What is Labuan banking?
Labuan banking means the business of receiving deposits on current accounts, deposit accounts, savings accounts, and includes the investment banking business, Labuan financial business, Islamic banking business and such other transactions and terms and conditions as specified by Labuan FSA in any currency including Malaysian Ringgit where permitted by Bank Negara Malaysia.
2. What is investment banking?
Investment banking means the business of providing credit facilities and consultancy and advisory services relating to corporate and investment matters, including making investments on behalf of any person. Other activities include undertaking foreign exchange transactions, interest rate swaps, dealings in derivative instruments or derivative financial instruments or any other similar risk management activities.
3. What is Islamic banking?
Islamic banking is defined as a banking business that is in accordance with Shariah principles.
4. Who may apply for Labuan banking licence?
Organisations that meet the following minimum criteria may apply for a Labuan banking licence:
Must be a bank or financial institution
Possesses a sound track record
Accorded a good credit rating by acceptable rating agencies
Supervised by a competent regulatory authority; and
Conforms to generally accepted standards of international banking practices or the Bank for International Settlements (BIS).
5. What is the minimum working minimum fund for an investment bank?
RM10 million or its equivalent in any other currency.