Malaysia's BIMB gets nod to start Bank Islam purchase talks with Dubai

KUALA LUMPUR, Oct 8 (Reuters) - Malaysia's BIMB Holdings Bhd

has obtained approval from the country's central bank to start talks with Dubai Financial Group to buy out the latter's 30.5 percent stake in the Southeast Asian country's oldest Islamic lender, Bank Islam.

"The negotiations are to be completed on or before March 31, 2013," BIMB, which owns a 51 percent stake in Bank Islam and is Malaysia's second-biggest Sharia bank, said in a local stock exchange filing on Monday.

The negotiations will also include Malaysian Haji pilgrims fund Lembaga Tabung Haji, which owns 51.76 percent in BIMB and 18.5 percent in Bank Islam.

Dubai Financial Group is a unit of Dubai Group, against which three banks began legal proceedings last month in an unprecedented move to secure repayment of loans in the Gulf state. The lawsuit against Dubai Group, an investment vehicle owned by Dubai's ruler, could delay a wider deal on restructuring $10 billion of debt.

(Reporting By Yantoultra Ngui; Editing by Muralikumar Anantharaman)