Unicorn International Islamic Bank Malaysia Berhad...

Annual Report 2009

Unicorn International Islamic Bank Malaysia Berhad (681879-K)

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Unicorn International Islamic Bank Malaysia Berhad aspires to be a leading global provider of Shari’ah-compliant investment banking products and services and to deliver exceptional value to clients and shareholders through a focus on innovation, professionalism and integrity-the shared values that drive the Bank’s every endeavour.

Vision

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Unicorn International Islamic Bank Malaysia Berhad (Unicorn Malaysia), a wholly-owned subsidiary of Unicorn Investment Bank B.S.C. (c) (Kingdom of Bahrain) is the first foreign Islamic bank to be licensed to conduct a full range of non-Malaysian Ringgit banking activities under the Malaysia International Islamic Financial Centre (MIFC) initiative. This initiative aims to strengthen Malaysia’s position as an international Islamic finance hub and build greater intermediation linkages between East Asia and the Middle East.

Unicorn Malaysia’s primary focus is in four core business lines, Investment Banking, Corporate Banking, Treasury and Strategic Planning & Direct Investments to complement Unicorn Bahrain’s existing operations. The Bank leverages its resources and expertise across each of these business lines to provide clients with a broad range of investment and banking solutions tailored to meet their specific requirements.

Unicorn Malaysia seeks to deliver exceptional value to clients and shareholders through innovation, professionalism and integrity - the shared values that drive the Bank’s endeavour to be a leading global provider of Shari’ah-compliant banking products and services. In every aspect of its business and through every level of the organization, Unicorn Malaysia is committed to upholding the highest standards of corporate governance and transparency. The Bank’s innovative products and transactions are fully compliant with Shari’ah principles and we believe that they are consistent with international financial best practice.

About Us

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Corporate Information

SHARI’AH ADVISORY BOARD (Head Office)

DR. KHAlID MAtHKOOR Al-MAtHKOOR Chairman

DR. AgIl JASIM Al-NASHMY Deputy Chairman

DR. ABDul SAttAR ABDul KAReeM ABu gHuDDAH

SH. ABDul-AzIz MOHAMMeD Al-gASIM

DR. AlI MuHYeAlDIN Al-QuRADAgHI

DR. MOHAMMAD DAuD BAKAR

SH. NIzAM MOHAMMAD SAleH YAQOuBY

SeNIOR MANAgeMeNt teAM

IKBAl DAReDIAChief Executive Officer

MOHAMeD tHAMeeM gHOuSe Deputy Chief Executive Officer

MOHAMAD YASIN ABDullAHChief Financial Officer

IDA AIzuN HuSINHead of Corporate Banking

KHADIJAH ISKANDARHead of Credit Management

KHAIRul ANuAR ABu BAKARHead of Operations

MAHMuD zuHOI PAlAlHead of Global Market Risk

DAle AFFeNDY YuSOFCompany Secretary

BOARD OF DIReCtORS

MAJID Al SAYeD BADeR Al-ReFAINon-Executive and Non-Independent Director

FAlAH NASSeR HAMAD Al-FAlAHNon-Executive and Non-Independent Director

DAtuK KAMARuDDIN tAIBNon-Executive and Independent Director

DIDIeR KwOK wAI lINon-Executive and Independent Director

DAtO’ ABDul AzIz ABu BAKARNon-Executive and Independent Director

CHIeF eXeCutIVe OFFICeR

IKBAl DAReDIA

DePutY CHIeF eXeCutIVe OFFICeR

MOHAMeD tHAMeeM gHOuSe

COMPANY SeCRetARY

DAle AFFeNDY YuSOF

RegISteReD ADDReSS

Level 38, Menara Standard Chartered, 30 Jalan Sultan Ismail50250 Kuala LumpurMalaysia

Tel: +603 2711 1606Fax: +603 2711 0787

OFFICe ADDReSS

Level 27 & 38,Menara Standard Chartered 30 Jalan Sultan Ismail 50250 Kuala LumpurMalaysia

Tel: +603 2711 1606Fax: +603 2711 0787Email: contact.malaysia@ unicorninvestmentbank.comwww.unicornmalaysia.com

HeAD OFFICe ADDReSS

Unicorn Investment Bank B.S.C. (c) P.O.Box 31700, Floors 3-7MENA Telecom BuildingBuilding No. 2304Road 2830, Block 0428Al-Seef District, Manama Kingdom of Bahrain

Tel: +973 17566000Fax: +973 17566001www.unicorninvestmentbank.com

AuDItORS

Ernst & Young, Level 23AMenara Milenium, Jalan Damanlela Pusat Bandar Damansara 50490 Kuala LumpurMalaysia

Tel: +603 7495 8000Fax: +603 2095 5332

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unicorn Investment Bank B.S.C.(c)P.O.Box 31700Floors 3-7, MENA Telecom BuildingBuilding No. 2304Road 2830, Block 0428Al-Seef District, ManamaKingdom of BahrainTel: +973 17566000Fax: +973 17566001Email: [email protected]

uIB Capital Inc.200 South Wacker DriveSuite 3020Chicago, IL 60606uSAPhone: +1 312 334 0770Fax: +1 312 334 0768Email: [email protected]

unicorn International Islamic BankMalaysia BerhadLevel 27 & 38, Menara Standard Chartered30, Jalan Sultan Ismail50250 Kuala LumpurMalaysiaPhone: +6 03 2711 1606Fax: +6 03 2711 0787Email: [email protected]

Unicorn Capital Turkey Değerler A.S.Muallim Naci Cad. No. 4780840 OrtaköyIstanbulturkeyPhone: +90 212 236 4141Fax: +90 212 236 3918Email: [email protected]

unicorn Capital Saudi ArabiaP.O.Box 69410Sky Towers,Olaya District, King Fahad Road2nd Floor, North Tower, Riyadh 11547Kingdom of Saudi ArabiaPhone: +9661 2191180Fax: +9661 2191270Email: [email protected]

International Presence

uSAturkey

Bahrain

Malaysia

KSA

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Board of Directors

1. MAJID Al SAYeD BADeR Al-ReFAI Non-Executive and Non-Independent

Director

Majid Al Sayed Bader Al-Refai is one of the pioneers of Islamic finance and has more than twenty years of experience in establishing Islamic financial institutions and providing Shari’ah compliant products. Majid Al-Refai is the Founder, Managing Director and Chief Executive Officer of Unicorn Investment Bank B.S.C. (c). He established a close relationship with UBS Investment Bank (USA) and engaged this global bank to assist in the capital-raising for the unique, multi-line Islamic business model represented by Unicorn. Majid Al-Refai was Founder, Director and CEO of First Islamic Investment Bank (renamed Arcapita), Bahrain, which was formed through the acquisition of another company launched earlier by Majid Al-Refai, Majestic Global Investments, Ltd. A graduate of Purdue University in Indiana, Majid Al-Refai has an undergraduate degree in Chemical Engineering and an MS in Finance.

2. DIDIeR KwOK wAI lI Non-Executive and Independent Director

Didier Kwok Wai Li is the current Chairman and Founding Partner of East Asia International Investment Group which is a significant mainland Chinese property developer - its first major project involves the development of a 10km property in the city of Wenling, Zhejian Province. In addition, he also founded a number of other successful businesses in Asia that he is still currently involved with. These include the Matrix Entertainment Group Ltd. (an entertainment promotional company): Asia Sports Development Ltd.; Remedy Asia Ltd. (which specializes in third party Personal Injury Compensation). He earned a Bachelor of Science in Business Administration and a Masters of Business Administration from Boston University.

3. FAlAH NASSeR HAMAD Al-FAlAH Non-Executive and Non-Independent

Director

Falah Nasser Hamad Al-Falah spent over sixteen years in the US where he was educated and then pursued a professional career. During this time, he gained wide experience in financial planning, stock brokering, asset management, mergers and acquisitions, financial and administrative management. He has a proven track record in developing financial plans that preserve capital, maximize investment returns and minimize tax liabilities for investors.

He began his career at Bear Stearns in California, where he spent nine years, first as Vice President of International Equity before taking on the role of Managing Director. Prior to joining Unicorn, Falah Nasser was a Senior Manager at Ahli United Bank where he played a key role in establishing and expanding the bank’s operations in Kuwait.

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4. DAtuK KAMARuDDIN tAIB

Datuk Kamaruddin Taib is currently the Executive Chairman and partner of Germanischer Lloyd GLM Sdn. Bhd., a leading company specializing in industrial services for the oil and gas industry in the Asian Region.

He has significant experience in merchant banking, corporate finance, mergers and acquisitions. His career started in 1980 with a leading merchant bank in Malaysia. Subsequently, he served as a director of several private companies and companies listed on Bursa Malaysia. Apart from the experience of serving on the board of companies listed on Bursa Malaysia, his experience also included serving on the board of companies listed on the Stock Exchange of India as well as on the Nasdaq (USA).

He currently serves as an Independent and Non-Executive Director of two companies listed on Bursa Malaysia. He holds a Bachelor of Science degree in Mathematics from the University of Salford, United Kingdom.

5. DAtO’ ABDul AzIz ABu BAKAR

Dato’ Abdul Aziz Abu Bakar is currently the Chief Executive Officer of the Malaysian Directors Academy (MINDA). Prior to his appointment as MINDA’s first CEO, Dato’ Aziz was the Chief Human Capital Officer at Telekom Malaysia (now known as TM), a position he occupied for five years before his retirement in September 2009.

He has also served in various senior positions across a number of industries including banking, oil & gas and aviation. Prior to his stint in TM, Dato’ Aziz was the Executive VP, HR Division of RHB Bank Berhad from 2001 to 2004. Before that, Dato’ Aziz spent twenty years in Shell Malaysia in various management positions in Internal & Computing Audit, Marketing Economics, Sales, Supply & Planning and HR. In 1991, he was assigned to an international posting to Shell Group Head Office in London where he held the position of the shareholders’ representative

overseeing Shell’s business interests in Hong Kong and China. He was made the General Manager of HR and Transformation for ASEAN countries upon his return. Prior to joining Shell Malaysia, he was a Fleet Planning Coordinator with Malaysian Airline System Berhad (MAS) where he began his career in 1977. Dato’ Aziz holds a Bachelor of Economics (Honours) degree from the University of Malaya.

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Shari’ah Supervisory Board

1. DR. KHAlID MAtHKOOR Al-MAtHKOOR Chairman

Dr. Khalid Al-Mathkoor is the Chairman of the Higher Consultative Committee for Finalization of the State of Kuwait. He is Lecturer in the Division of Comparative Jurisprudence and Shari’ah Policy of the Faculty of Shari’ah and Islamic Studies at the University of Kuwait Dr. Khalid is a member of the Higher Planning Board of the State of Kuwait, and serves on the Shari’ah Supervisory Boards of a number of Islamic Banks. He holds a PhD in Shari’ah from Al-Azhar University.

3. DR. ABDul SAttAR ABDul KAReeM ABu gHuDDAH

Dr. Abdul Sattar Abdul Kareem Abu Ghuddah is a member of the Islamic Fiqh Academy which evolved from the Organizations of Islamic Conference in Jeddah, Saudi Arabia. He sits on both the Standard Board and Shari’ah Board of AAOIFI. He is also a member of the Shari’ah Supervisory Board for a number of Islamic banks. Previously, Dr. Abdul Sattar held the positions of Expert and Reporter for the Islamic Fiqh Encyclopedia, Ministry of Awqaf and Islamic Affairs, State of Kuwait. He holds a PhD in Shari’ah from Al-Azhar University.

2. DR. AgIl JASIM Al-NASHMY Deputy Chairman

Dr. Agil Jasim Al-Nashmy is a Professor at the Faculty of Shari’ah and Islamic Studies at the University of Kuwait. He represents the State of Kuwait in the Islamic Fiqh Academy, which evolved from the Organizations of Islamic Conference in Jeddah, Saudi Arabia. He is a member of the Shari’ah Supervisory Boards of a number of Islamic Financial Institutions (AAOIFI). Dr. Agil also serves on the Fatwa Committee of the Kuwait Ministry of Awqaf and Islamic Affairs. He holds a PhD in Shari’ah from Al-Azhar University.

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4. DR. AlI MuHYeAlDIN Al-QuRADAgHI

Dr. Ali Al-Quradaghi is a Professor and Chairman of the Department of Jurisprudence and its Principles in the Faculty of Shari’ah Law and Islamic Studies at the University of Qatar. He is a member of the Islamic Fiqh Academy, Organization of Islamic Conference, in the Kingdom of Saudi Arabia. He also sits on the Shari’ah Supervisory Board for a number of Islamic banks. Dr. Ali holds a PhD in Shari’ah from Al-Azhar University.

6. SH. NIzAM MOHAMMAD SAleH YAQOuBY

Sh. Nizam Yaqouby is a member of the Shari’ah Supervisory Board of a number of Islamic banks and Institutions. He holds a BA in Economics and Comparative Religion from McGill University, Canada and at present is a PhD candidate in Islamic Law at the University of Wales.

7. DR. MOHAMMAD DAuD BAKAR

Dr. Mohammad Daud Bakar is currently President and CEO of the International Institute of Islamic Finance Inc. and Amanie Business Solutions Sdn. Bhd., Kuala Lumpur, Malaysia. Previously, Dr. Bakar held the position of Deputy Rector for Student Affairs and Development of the International Islamic University, Malaysia. He also served as Dean of the Centre for Postgraduate Studies and Associate Professor of Islamic Law at the International Islamic University, Malaysia. Dr. Mohammad is a member of the Shari’ah Advisory Councils of both the Securities Commission and Bank Negara (Central Bank), Malaysia. Dr. Mohammad holds a PhD in Shari’ah from St. Andrews University, UK.

5. SH. ABDul-AzIz MOHAMMAD Al-gASIM

Sh. Abdul-Aziz Mohammad Al-Gasim is currently General Manager of “Al-Gasim for Shari’ah and Legal Consultation Office”. He is a member of the Saudi Chamber of Commerce and Industry and legal and Shari’ah consultant for a number of Islamic and conventional banks. Sh. Abdul-Aziz is presently a PhD candidate in Shari’ah - Applied Law and Philosophy from the College of Shari’ah, Riyadh. He also holds a MS in Legal Systems from the Higher College of Jurisdiction, Riyadh.

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Senior Management Team

1. IKBAl DAReDIA Chief Executive Officer

Ikbal Daredia has over twenty years of experience in Islamic Banking. Prior to joining Unicorn, he was the Deputy Chief Executive Officer of Noriba, UBS’s global Islamic platform for Shari’ah compliant products and services and before that, Ikbal worked for four years with ABN Amro Bank in Bahrain as the Global Head of Islamic Financial Sevices. Ikbal has originated and executed several Islamic structured cross border transactions for foreign entities in Turkey, in the GCC countries, the Philippines, India, Pakistan and the United Kingdom. In 2007, he led the distribution efforts for two Sukuk with a total value of USD 1.6 billion issued on behalf of a prominent Saudi corporate. He was also the Noriba project leader for the first ever USD 750 million Exchangeable Sukuk for Khazanah, Malaysia, and the USD 350 million first internationally rated corporate Sukuk for Sarawak Corporate Sukuk Inc. (Malaysia), which was jointly led by UBS Investment Bank and Noriba in 2004. Prior to this, in 2001, he worked on the Sukuk issue for Kumpulan Guthrie, Malaysia.

Ikbal is an Associate of the Chartered Institute of Bankers, England.

2. MOHAMeD tHAMeeM gHOuSe Deputy Chief Executive Officer

Mohamed Thameem Ghouse is one of the founding team members of Unicorn Investment Bank B.S.C. (c). He has extensive experience in business commerce, corporate treasury, foreign currency exposure management, strategic M&A, corporate finance and financial controls.

Prior to joining Unicorn, Thameem was a Senior Partner with The International Investor (TII), Kuwait and UAE, a wholesale Islamic investment house, specializing in asset management, corporate finance and portfolio management. At TII, he was part of the Corporate Finance team for due diligence and investment proposal. Earlier, Thameem worked as a Manager of Treasury and Credit for the Al-Sayer Group of companies, a conglomerate and the sole agent and distributor of Toyota and Lexus vehicles in Kuwait. He was instrumental in developing a hedging strategy to suit the requirements of the business, restructuring the banking facilities just after Iraq’s invasion of Kuwait and negotiating competitive credit lines for the group.

He is a member of Institute of Financial Consultants, USA and is a Chartered Management Accountant from the United Kingdom as well as a fellow member of the Chartered Institute of Management Accountants.

Thameem, graduated from University of Sri Jayawardenapura, Sri Lanka with a degree in Business Commerce.

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3. MOHAMAD YASIN ABDullAH Chief Financial Officer

Prior to joining Unicorn Malaysia, Mohamad Yasin Abdullah was the Chief Financial Officer of Suria Capital Holdings Berhad for two years (a public listed company). He began his career as a Chartered Accountant with Malayan Banking Berhad and stayed for six years until 2002. Later, he joined a construction-based public-listed company, Tronoh Consolidated Malaysia Berhad (now known as Zelan Berhad) as their Finance Manager. He later joined Bank Muamalat Malaysia Berhad as Head of Finance / Vice President, Finance.

Mohamad Yasin is a Fellow Member of the Association of Chartered Certified Accountants (ACCA) and the Certified Islamic Professional Accountant (CIPA) issued by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), Bahrain. He is also a member of Malaysian Institute of Accountants (MIA), Chartered Institute of Management Accountants (CIMA) and Malaysian Institute of Certified Public Accountants (MICPA). Currently, he also serves as a member of the Malaysian Accounting Standards Board (MASB) Working Group for Accounting Framework and Islamic Financial Reporting.

Mohamad Yasin, graduated from International Islamic University, Malaysia (IIUM) with a Bachelor’s Degree in Accounting (Honours) and Master of Business Administration (Finance).

4. IDA AIzuN HuSIN Head of Corporate Banking

Ida Aizun Husin has twenty years of banking experience with the last six of those in the Islamic banking industry. Prior to joining Unicorn Malaysia to set up its Corporate Banking Division, she was the Head of Corporate & Commercial Banking of Hong Leong Islamic Bank Berhad, a new department introduced when she joined the Bank.

She started her banking career with RHB Group as a management trainee in 1991. Throughout her employment with RHB, she was assigned various job responsibilities ranging from marketing, credit evaluation and loan rehabilitation and recovery to product development for commercial and corporate loans. Her last position before joining RHB Islamic was that of Vice President, Head of Early Care Corporate Dept of Recovery Division. Her experience in Islamic banking began in 2005 when she joined RHB Islamic Bank Berhad as Head of Corporate Banking. She was one of the pioneer team members who was responsible for setting up the Bank itself. At RHB Islamic Bank, she was also one of the permanent members of RHB Islamic Bank’s Credit Committee, Assets and Liabilities Committee and the Management Committee.

Ida Aizun Husin graduated from Acadia University, Halifax, Nova Scotia, Canada with a Bachelor’s Degree in Business Administration.

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Senior Management Team (Cont’d.)

5. KHADIJAH ISKANDAR Head of Credit Management

Khadijah Iskandar has more than seventeen years of experience within the financial services industry. She has worked with organizations within MBf Group, specifically in the International Division of MBf Leasing Sdn Bhd and the Accounts Department of MBf Protections Services Sdn Bhd.

She began her career with RHB Bank in May 1994 as a trainee in the Commercial Loans Division. During her employment with RHB Group, she undertook various positions in credit-related functions in both the Commercial and Corporate Loans Divisions, ranging from marketing, credit processing, product development, credit administration, credit restructuring and loan recovery/rehabilitation to credit evaluation. Her last position in RHB Bank was that of Senior Relationship Manager for Corporate Customers.

In December 2005, she was appointed to the pioneer team created to set up RHB Islamic Bank, the first Islamic Bank in Malaysia being formed under the subsidiary structure. She was the Head of Credit Management Division, who was also responsible for setting up the Credit Support Department and the Non-Performing Financing Department. Representing RHB Islamic Bank, she was an examination committee member of Certified Islamic Financing Professionals (CIFP) under the purview of the Islamic Banking and Finance Institution Malaysia (IBFIM). In April 2007, she moved on to Hong Leong Islamic Bank Berhad to head the Credit Evaluation Division.

Khadijah Iskandar, graduated with a Bachelor’s Degree in Accounting in 1991 from the University of Denver, Colorado, USA, under a full scholarship from the Public Service Department. She also holds a Certified Credit Professional qualification.

6. KHAIRul ANuAR ABu BAKAR Head of Operations

Khairul Anuar bin Abu Bakar has over thirteen years banking experience, with the last four within Islamic finance. He began his career in 1997 as an executive with RHB Bank Berhad within the FX Processing and Reconciliations Unit, Treasury Processing and Control Department. In 2000, he moved to OCBC Bank (M) Berhad as Assistant Manager of the Treasury Operations Department.

After six years with OCBC Bank, he joined Al-Rajhi Banking and Investment Corporation (M) Berhad as a Manager, Treasury Operations Department. He was one of the pioneer members involved in setting up the initial infrastructure before the launch of the Bank, specifically the treasury and payment system and product development.

In 2008, he joined Deutsche Bank (M) Berhad as Assistant Vice President for Global Market Operations. Khairul Anuar was given a mandate to set up an Islamic Banking Window and was responsible for setting up the infrastructure, product development, processes, back office systems, documentations and training. Deutsche Bank Islamic banking window was successfully launched in April 2009. In addition, he was also Acting Head of Global Market Operations, which covers foreign exchange, money market, structured products, derivatives and fixed income. He was also involved in the Money Market and Derivatives Treasury System Migration Project.

Khairul Anuar graduated from Universiti Teknologi MARA (UiTM) with a Master’s Degree in Science, Information Management, a Bachelor Degree in Accountancy (honours) and a Diploma in Accountancy.

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7. MAHMuD zuHOI PAlAl Head of Global Market Risk

Mahmud Zuhoi Palal was formerly with Malayan Banking Berhad (Maybank) for over seventeen years. His last position was as Vice President/Head of Market Risk Governance, Market Risk Management Sub-sector that provides oversight on global treasury risk exposure as well as participated in the implementation of the new treasury risk system. He was also responsible in establishing and managing the subsector’s Business Continuity Plan (BCP), Call-tree and Disaster Recovery Work Area. Prior to that, he was the Head of Documentation and primarily in charge of documenting derivatives transactions.

Apart from introducing the Documentation and OTC Collateral Policies, he serves as the negotiator and coordinator for the execution of ISDA Master Agreements, Global Master Repurchase Agreements and other market standard agreements with numerous counter parties. Prior to that, he was involved in the setting-up of Quantitative Application Section, a unit that measures market risk exposure using Value-at-Risk engine. Mahmud Zuhoi was a practicing Tax Accountant under license from the Ministry of Finance for three years until 1991. He graduated from Universiti Teknologi MARA (UiTM) with a

Diploma in Accountancy and Certificate in Taxation.

8. DAle AFFeNDY YuSOF Company Secretary

Dale Affendy Yusof has over thirteen years of experience in company secretarial and legal from various industries. Apart from being the Company Secretary of the Bank, he is also responsible for all of the Bank’s legal and compliance matters as well as handling the Bank’s corporate affairs-related matters.

He has been the Company Secretary for numerous companies ranging from consulting engineering group, toll concessionaire and property group, IT, government linked company and banking institution. He was the Company Secretary for Maybank Islamic Berhad, Mayban Trustees Berhad and Maybank International (L) Ltd, to name a few, prior to joining the Bank in April 2010.

Dale Affendy graduated with a Degree in Law from Leeds Metropolitan University, United Kingdom and is an Associate member of Malaysian Institute of Chartered Secretaries and Administrators (MAICSA).

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Business Lines

INVeStMeNt BANKINg

Unicorn Malaysia’s ability to structure, manage and place innovative debt structuring and securitization transactions leaves the Bank’s Investment Banking Division well placed to take advantage of the growing demand by both issuers and investors for Shari’ah-compliant capital market products. The division caters to both corporate and sovereign clients, providing capital markets financing and advisory services, including access to the global capital markets (primarily through the structuring, arranging and issuance of Sukuks); structured finance; asset securitization; and client rating advisory services. The division also provides strategic advisory services encompassing valuations, business plans, restructuring and project advisory.

CORPORAte BANKINg

Through its Corporate Banking division, Unicorn Malaysia provides innovative advice to the Bank’s clients, with an emphasis on delivering successful solutions tailored to meet each client’s specific requirements. The division leverages the Bank’s collective experience and expertise as well as an in-depth knowledge of local and regional market conditions to assist clients in meeting their financing needs. The Corporate Banking division also manages financing portfolio and client relationship. In addition, it also provides strategic advisory services encompassing direct financing, club deal and syndicated financing.

tReASuRY

The Treasury division plays a key role in servicing corporate clients and producing investment products, in addition to managing Unicorn Malaysia’s own liquidity and funding needs. This includes the structuring of investment products including equities, commodities, currencies as well as money market products to allow clients to efficiently manage their liquidity.

StRAtegIC PlANNINg & DIReCt INVeStMeNtS

Unicorn Malaysia’s Strategic Planning & Direct Investments strategy of acquiring equity stakes in synergistic local and regional financial institutions is fundamental to the Group’s ambitions to establish a global presence. This inorganic growth strategy aims to provide Unicorn Malaysia with domestic platforms in growing markets and to strengthen the Bank’s product delivery and distribution channels.

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Organization Chart by Functions

Board of Directors

Chief Executive Officer

Head, CreditManagement

Head, Global Market Risk Internal Audit

Head,Invesment Banking

Head,treasury

Head,Corporate Banking

Origination MoneyMarket

Sales /Relationship

FixedIncome

Execution ForeignExchange Execution

Structured Products

CreditEvaluation

Strategic PlanningMarket Risk Compliance /

LegalFinancialControl

Operations

InformationTechnology

Corporate Communications

Administration

CreditSupportOperations Risk Human

Resource

Credit Risk

Deputy Chief Executive Officer

Company Secretary

Executive Committee

Remuneration & Nomination

Committee

Audit & RiskManagementCommittee

ChiefFinancialOfficer

Shari’ahCommittee

Shari’ahCoordinator

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In December 2007, Unicorn International Islamic Bank Malaysia Berhad (Unicorn Malaysia or the Bank) became the first foreign Islamic bank to be licensed to conduct a full range of non-Malaysia Ringgit banking activities under the Malaysia International Islamic Financial Centre (MIFC) initiative, which aims to promote Malaysia as a major hub for international Islamic finance. The Bank initially focused on investment banking with the aim of complementing the operations of the Unicorn Group in Bahrain and capturing cross-border transactions between the Gulf Cooperation Council (“GCC”) region and Malaysia.

Having been operational for two years, Unicorn Malaysia has actively been taking steps towards strengthening its presence in Malaysia by increasing its paid-up capital via a non-renounceable rights issue to US$24 million, over and above the minimum capital of RM10 million required by Bank Negara Malaysia, and we are committed to further increasing our share capital to support the Bank’s business growth needs. The Bank has also put in place its key organizational structure and has identified the remaining resources required to continue to strengthen our operating capabilities.

During the year, we were successful in raising total deposits of RM800 million (approximately US$240.6 million), and the total assets of the Bank increased eight-fold to approximately RM915 million (approximately US$275.3 million). Treasury and Corporate Banking were the key drivers of the Bank’s business in 2009. The Corporate Banking division closed its maiden deal, a RM101 million (approximately US$29 million) club deal with Bank Kerjasama Rakyat Malaysia Berhad to provide Islamic financing to Puncakdana Sdn Bhd for the purposes of developing CITTA, an open concept retail precinct located at the upscale Saujana/Ara Damansara neighborhood in Kuala Lumpur. As part of our cross-border initiative, the Bank had its first cross border deal with the placement of shares of a Canadian company to international strategic investors. The Bank also financed four major transactions in Saudi Arabia and Bahrain amounting to approximately US$24 million.

In Treasury, we were the first institution to obtain approval from Bank Negara Malaysia for our Wakala Deposit and Restricted Wakala Deposit products and successfully introduced these to the market. The Bank also signed Malaysia’s standardized Commodity Murabaha Master Agreement and Master Wakala Agreement along with 22 other banks in Malaysia. These agreements are intended to promote uniformity and operating efficiencies within the Islamic banking sector.

CEO’s Message

Overview of 2009

Operational Achievements

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In order to reinforce the Bank’s commitment to further broaden and deepen its presence locally, we have developed a new Strategic 5-year Business Plan based on two key drivers, namely the value propositions that continue to exist in the Malaysian Islamic financial services market space and the changing imperatives for conducting investment banking business. We have also rationalized our strategic objectives which encompass all the Bank’s business lines: firstly, to place emphasis on business lines according to the Bank’s growth stage; secondly, to extend our business capabilities and diversify our funding sources; thirdly, to operate as a regional hub for Unicorn Group; and lastly, to maintain our innovative product capabilities.

We are confident that with the newly developed Strategic 5-year Business Plan and with Allah’s grace, the Bank will be able to achieve its aspirations going forward.

On behalf of Unicorn Malaysia, I would like to record our appreciation to the Management of our parent Bank, Unicorn Investment Bank B.S.C. (c), for their continuing strong support; to Bank Negara Malaysia for its continued guidance; and last but not least, Unicorn Malaysia’s exceptional team of employees who have worked diligently to make the Bank profitable and contribute to its success.

IKBAl DAReDIA

Strategic Direction and Prospects

Appreciation

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Corporate Governance and Compliance

Unicorn International Islamic Bank Malaysia Berhad (Unicorn Malaysia or the Bank) aspires to the highest standards of ethical conduct: doing what it says; reporting results with accuracy and transparency; and maintaining full compliance with the laws, rules and regulations that govern the Bank’s business.

Good governance is one of the Bank’s key doctrines. The Bank is committed not only to meeting legal and regulatory governance requirements, but to having best practice governance. The Bank is however aware that good corporate governance is not an end in itself, but that it facilitates the Bank’s capacity to define and achieve its purposes. Corporate governance establishes how the shareholders, Board of Directors and management interact in determining the direction and performance of the Bank. Good governance holds management accountable to the Board and the Board accountable to the owners and other stakeholders.

In view of the importance of corporate governance, the Board of Directors (the Board) of the Bank has adopted its own Corporate Governance Charter. This Charter, together with the Bank’s Articles and Memorandum of Association and the charters of certain Board committees, provide the authority and practices for governance of the Bank.

The Bank regards the guiding principles of good corporate governance to be: Fairness : Minority shareholders, investors and other stakeholders are

treated fairly and their interests are taken into account.

Transparency : Disclosure of information - financial, organizational, governance and related transactions - is adequate and timely for stakeholders to assess the performance of the organization.

Accountability : Senior management is accountable to the Board for achieving plans and implementing approved policies that ensure the safeguarding of assets and the financial viability of the Bank. In turn, the Board is accountable to the shareholders and other stakeholders.

Responsibility : Clear lines of responsibility need to exist in terms of delegations of authority and which actions or decisions require Board or shareholder approval. Responsibility must be attributed in order to have accountability for results.

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The Board of Directors’ primary responsibilities are to provide leadership to the Bank, establish its objectives, and approve the strategies that direct the ongoing activities of the Bank to achieve these objectives.

The Board will provide effective governance over the Bank’s affairs for the benefit of its shareholders, and balance the interests of its diverse constituencies around the world, including its clients, employees, suppliers and local communities. In all actions taken by Board, the directors are expected to exercise their business judgment in what they reasonably believe to be the best interest of the Bank. In discharging that obligation, directors may rely on the honesty and professional integrity of the Bank’s senior executives and its outside advisors and auditors.

The Board’s principal channel of communication to management shall be through the CEO, who shall have primarily responsibility to the Board for implementing its decisions.

Roles and Responsibilities of the Board

The Board of Directors of the Bank is expected to fulfill the following responsibilities:

• Review and approve strategies, business plans and significant policies and monitor management’s performance in implementing them;

• Set corporate values and clear lines of responsibility and accountability that are communicated throughout the organization;

• Ensure competent management;

• Ensure that the operations of the Islamic bank are conducted prudently, and within the framework of relevant laws and policies;

• Ensure that the Islamic bank establishes comprehensive risk management policies, processes and infrastructure, to manage the various types of risks;

• Institute comprehensive policies, processes and infrastructure to ensure Shari’ah compliance in all aspects of the Islamic Bank’s operations, products and activities;

• Set up an effective internal audit department, staffed with qualified internal audit personnel to perform internal audit functions, covering the financial, management and Shari’ah audit;

• Establish procedure to avoid self-serving practices and conflicts of interest including dealings of any form with related entities;

• Ensure protection of the interests of the depositors, particularly investment account holders;

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• Establish and ensure the effective functioning of various Board Committees;

• Ensure that the Islamic bank has a beneficial influence on the economic well being of its community;

• Discuss, evaluate and provide input on strategies and policies to suit local environment; and

• Deliberate and approve major issues and decisions.

The Board is ultimately accountable and responsible for the affairs and performance of the Bank. They shall establish the objectives of the Bank, develop the strategies to meet these objectives, and oversee the implementation of these strategies.

The standing committees of the Board are the Executive Committee, the Audit & Risk Management Committee and the Nomination & Remuneration Committee. The Board, upon recommendation of the Nomination & Remuneration Committee, appoints committee members after consultation with the individual directors. Committee chairs and members are rotated at the recommendation of the Nomination & Remuneration Committee.

Each committee has its own written charter which complies with the applicable corporate governance rules, and other applicable laws, rules and regulations. The charters set forth the mission and responsibilities of the committees as well as qualifications for committee membership, procedures for committee member appointment and removal, committee structure and operations and reporting to the Board.

The Audit & Risk Management Committee is a standing committee of the Board. The purpose of the Audit Committee is to assist the Board in fulfilling its oversight of responsibility relating to:

• The integrity of the Bank’s financial statements and financial reporting process and the Bank’s systems of internal accounting and financial controls;

• The appointment of an internal auditor and the regular review of the internal audit function;

• The annual independent audit of the Bank’s financial statements, the engagement of the external auditors and the evaluation of the external auditors’ qualifications, independence and performance;

• Compliance by the Bank with legal and regulatory requirements, including the Bank’s disclosure controls and procedures; and

• Compliance with the Bank’s code of conduct.

Board Committees

Audit & Risk Management Committee

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All members of the Committee are non-executive directors and consist of not less than three members of which the majority is independent directors. The Chairman of the Board or the Chief Executive Officer are not allowed to be members of the Committee and appointments of the Committee shall be for a period of up to three years, which may be extended for two further three-year periods, provided the director remains independent.

The Nomination & Remuneration Committee is responsible for identifying individuals qualified to become Board members and recommending to the Board the director nominees for the next Annual General Meeting. It leads the Board in its annual review of the Board’s performance and recommends to the Board director candidate for each committee for appointment by the Board. The Committee takes a leadership role in shaping corporate governance policies and practices, including recommending to the Board the Corporate Governance Charter applicable to the Bank and monitoring management’s compliance with the Charter and policies. The Committee also evaluates the skills and expertise of the directors and recommends the relevant training accordingly.

It also devises, with the CEO, the succession plan for the Board and the senior management, specifically, the Chief Executive Officer, Chief Operating Officer and the Chief Financial Officer. The Committee considers recommendations by the Chief Executive Officer on the remuneration of senior management, and the Chairman’s recommendations on the Chief Executive Officer’s remuneration and presents these to the Board for ratification. The Committee is responsible for recommending to the Board the form and amount of director compensation, for approval at the Annual General Meeting of the Bank, and approving the remuneration policy and special compensation plans including annual bonus schemes, share option plans and staff saving schemes across the Bank.

The Committee comprises of at least three members, all of which are non-executive directors, and preferably independent. The Chairman of the Committee should be a non-executive, independent director. The Chairman of the Board may chair the Nomination & Remuneration Committee, except when it is dealing with the appointment of a successor to the Board chairmanship.

Nomination & RemunerationCommittee

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The Executive Committee of the Bank is the standing committee of the Board. The primary purpose of the Committee is to consider specific matters delegated to it by the full Board and make recommendations thereon to the Board or decisions based on authorities specifically delegated by the Board. Responsibilities and authorities are to be reviewed annually by the Nomination & Remuneration Committee.

• To assist the Board to set annual budgets on operational expenditure and capital expenditure and to set annual profit targets.

• To assist the Board in its review of the performance and business efficiency of Unicorn Malaysia.

The Committee consists of not less than four directors and at least three non-executive directors. Members of the Committee and the Committee Chair are appointed by and may be removed by the Board on the recommendation of the Nomination & Remuneration Committee.

The Bank relies on its Head Office’s Supervisory Board for guidance and advice to ensure consistency throughout the whole Group. A seven-scholar Supervisory Board has been established to provide Islamic advice and guidance to ensure that all the Group’s activities comply with law. The members of the Supervisory Board are prominent Islamic scholars who are well versed in international financial markets and have a proven track record in the implementation of rules and principles in Islamic banks, as well as in product development and Islamic finance structuring techniques.

The Supervisory Board is proactively involved in all product development and investment decisions relating to transactions and all underlying contractual documentation is only finalized after obtaining the approval of the Assurance Department under the direct oversight of the Supervisory Board sets out the Islamic opinions (Fatwas) which are required for approval of the structures of each financial transaction, service or investment product.

The Group’s Assurance division works closely with the Supervisory Board in the development and pre-screening of every business proposition. The Shari’ah Assurance division also plays a key role in ensuring that the Fatwas of the Supervisory Board are consistently applied.

Executive Committee

Shari’ah Supervisory Board

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The Management Executive Committee is the Bank’s management team’s forum for major operational decisions and it serves as the management’s principal decision making body to oversee the overall direction and operations of the Bank.

The Asset & Liability Committee is responsible for managing the asset and liability structure, liquidity and funding strategy of the Bank. This involves monitoring and reviewing the Bank’s financial risks including liquidity, market and counterparty risk and ensuring that appropriate strategies exist for the management of the Bank’s assets, liabilities and capital.

The IT Steering Committee has the primary responsibility to provide IT direction where it reviews on an ongoing basis the IT strategic plan to ensure that it is consistent with the overall corporate direction. The Committee also reviews new technology vendors and provides approvals. Apart from that, it also monitors any major business initiative that may impact the systems. Post implementation system reviews and IT effectiveness assessments that are independents of the IT department, the findings and recommendations of the review are presented to the Committee with a response from the IT department.

The Credit Committee is the Bank’s credit approving authority which is responsible for overseeing the management and performance of the Bank’s credit related transactions in accordance with the Bank’s guidelines and Credit Policy and to perform all such actions and activities as may be referred to it from time to time by the Board of the Bank.

Management Executive Committee

Asset & Liability Committee

IT Steering Committee

Credit Committee

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Risk Strategy

RISK MANAgeMeNt

The Bank is committed to actively managing its risks and to adopting international leading practices and complying with the requirements of BNM. The Bank takes cognizance of the risks which are inherent in banking and financial services and that in order to achieve its strategic and business objectives the identification, assessment, management and implementation of control or mitigating activities of these risks is necessary.

The Risk Strategy of the Bank is in line with its parent bank, Unicorn Investment Bank B.S.C. (c), which defines its overall Risk Strategy objectives as follows:

• Manage risks inherent in the banking transactions to align with the overall risk appetite of the Bank and its capital adequacy targets;

• Strengthen its risk management practices to reflect industry leading practices; and

• Align its tolerances and risk appetite capacities based on its business strategy and capital availability.

Board of Directors (the Board). The Board has the overall responsibility for risk management. The Board also has the responsibility to acknowledge and be aware of all risks the Bank is exposed to and ensure that resources like people, policies, procedures, systems and methodology are assigned to address these risks. The Board approves the Bank’s risk appetite, framework, plans, performance target, delegation of authorities and the establishment of effective control procedures.

Audit & Risk Management Committee (ARMC). The Board’s oversight role is further strengthened with assistance from its ARMC which is responsible for deliberating audit and risk management issues prior to submission to the full Board for approval / direction. The members comprise of three (3) non-executive directors with independent status.

Asset & Liability Management Committee (ALCO). The ALCO is a management level committee chaired by the Chief Financial Officer (CFO) and is responsible for managing the overall liquidity risk, market risk and capital management of the Bank. This involves monitoring and reviewing the Bank’s liquidity and market risks and ensuring that appropriate strategies are in place for managing the Bank’s assets, liabilities and capital.

Credit Committee (CC). The CC is a management level committee that is chaired by the CEO, whose primary responsibility is for credit application approvals and effective credit management of the Bank. Apart from deliberating and deciding all credit applications, its responsibilities include: monitoring issues that materially impact the present and future quality of the Bank’s financing book, ensuring early warning signals are in place and managing the Bank’s Non-Performing Financing (NPF).

Risk Governance

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In complementing the efforts of the above Committees, the Bank’s broad framework of its risk management is primarily guided by the Group’s direction and initiatives. This includes the centralization of risk policies and execution of Basel II related projects which are meant to be implemented across the Group. At the transaction level, the Group ALCO and Group Risk Executives Committee (REXCO) provide its feedback prior to approval and execution by the Board.

Market Risk is the risk that movements in market factors, including foreign exchange rates and commodity prices, equity prices, profit rate benchmark and credit spread, will reduce the Bank’s income or value of its portfolios. In tandem with the Bank’s present capability and infrastructure, its treasury activity is limited to funding and liquidity operations. Nevertheless, the Bank is currently assuming a very minimal market risk exposure, i.e. in the form of foreign exchange risk that arises from holding a Malaysian Ringgit placement meant to satisfy its operating expenditure. At the Group level, the Group Market Risk Policy is currently being drafted to be rolled-out across the Group within the current financial year.

liquidity Risk is the risk that the Bank does not have sufficient financial resources to meet its obligations as they fall due or will have to do so at an excessive cost. This risk arises from mismatches in the timing of cash flows. In mitigating such risk, the mismatches are regularly reviewed by the Bank’s management via daily reports and observing of a reasonable diversity mix of its funding sources between corporate depositors, government-linked companies and interbank players.

Operational Risk is the risk arising from inadequate or failed internal processes, people and systems from external events on the Bank’s day-to-day operations. The Bank’s main objective in its operational risk management is to manage and control operational risk in a cost effective manner and consistent with the overall Group risk approach and appetite. For that reason, the Bank is primarily guided by the Group direction whereby the recently completed Group’s Operational Risk Policy, Risk and Control Assessments and Business Continuity Plans (BCP) will be implemented at the Bank level throughout the current financial year.

Credit Risk is the risk of financial loss if a customer or counterparty fails to meet a payment obligation under a contract. It arises principally from the Bank’s financing deals, treasury placements and holding of Sukuk under its available-for-sale portfolio. The Credit Risk Management Unit (CRMU) has the overall responsibility for identifying, monitoring, measuring and managing credit risks assumed by the Bank. Presently, the Bank has in place a Credit Assessment and Credit Administration function as part of the CRMU. In line with the Bank’s nature, size and complexity, certain functions like the Credit Policies and Analytics are undertaken at the Group level.

Group Risk Management Oversight

Risk Management Process

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