Societe Generale , France's third-largest bank by assets, will set up a 1 billion ringgit ($311.3 million) multicurrency sukuk (Islamic bonds) programme in Malaysia, the second conventional bank to do so in as many weeks.

Sukuk are growing in popularity as a funding choice for corporates and sovereigns across the globe, with Malaysia a preferred jurisdiction as the largest and most liquid Islamic capital market.

The programme would issue sukuk through a wholly owned subsidiary of SocGen, a structure featuring back-to-back sharia-compliant contracts that would provide investors legal recourse to the French lender, Kuala Lumpur-based credit ratings firm RAM Ratings said in a bourse filing on Thursday.

The sukuk wakalah program has a tenure of up to 15 years and has been approved by Malaysia's central bank and Securities Commission, SocGen said in a media release on Thursday. Hong Leong Islamic Bank Bhd is advising the deal.

"Given the advancement of Islamic finance in recent years and the importance of the Malaysian and Southeast Asian capital markets to its business, SocGen stands ready to issue out of its programme at the right market conditions and timing," the bank said.

Reuters reported last year that SocGen was considering issuing $300 million worth of sukuk in Malaysia, with proceeds used to expand the bank's operations in the Middle East.

The programme, which RAM rates at AAA(s), or stable, comes a week after Bank of Tokyo-Mitsubishi UFJ, a unit of Mitsubishi UFJ Financial Group, set up a $500 million multicurrency sukuk programme in Malaysia.

Such new issuers are crucial in Malaysia's efforts to internationalise its Islamic capital markets, which remains dominated by domestic issuers. International firms represent less than 10 percent of total issuance.

An accommodative tax regime and strong demand from local investors have made Malaysia an attractive market for issuers from as far away as Kazakhstan, but big names could encourage even more firms to tap the market.

Malaysia's sukuk market saw a 26 percent slump in issuance last year due to uncertainty ahead of national elections and worries about the Federal Reserve's monetary policies, credit ratings agency Moody's said in a report.

Moody's estimates issuance will pick up by 10 percent over 2014 and 2015.