IBank aims to stay afloat with new partnerships
The state-owned Islamic Bank of Thailand (IBank) is pressing ahead with plans for new partnerships by approaching 35 local and foreign players.
Thirty of them are financial institutions and five are big funds, said chairman Chaiwat Utaiwan, without revealing any names.
Qualifications for the new partner include a solid financial position, the ability to strengthen IBank, an understanding of sharia-compliant financial services and an extensive network, he said.
The State Enterprises Policy Commission (superboard) will permit the new partner of IBank to hold up to a 74.5% stake in the bank. If the partner wants to own more than that limit, it can seek government approval. In that event, the government may initially allow the partner to hold in excess of the 74.5% limit and gradually reduce the shareholding to the threshold at a later point.
Details are expected to become clearer by the middle of this year.
The Finance Ministry holds a 48.5% stake in IBank, the Government Savings Bank 39.8%, Krungthai Bank (9.83%), with other shareholders accounting for the rest.
The loss-making IBank has long sought a new partner, though that plan has hit snags as interested investors have requested the state-owned bank finish recapitalising beforehand to raise its capital adequacy ratio (CAR) to meet the Bank of Thailand’s minimum requirement of 8.5%.
To reach that requirement, IBank needs to raise its capital by 20 billion baht. The superboard, however, has approved injecting only 18 billion baht into the bank. That injection has yet to be completed.
IBank’s CAR now has a negative value of 20%.
Apart from the recapitalisation, divestment of non-performing financing (NPF) worth 48 billion baht to Islamic Asset Management (IAM) is also part of the bank’s business rehabilitation plan.
The State Enterprise Policy Office’s website reported that IBank’s outstanding loans amounted to 98.7 billion baht at the end of 2015, with NPF totalling 48 billion or 46.7%.
Mr Chaiwat said half of the NPF has collateral and the bank has brought more than 10 law suits against those who have caused it damages.
The superboard recently allowed IBank to raise its ceiling loan amount to exceed 200 million baht per borrower, and the bank will soon seek the central bank’s approval, he said.
The bank aims for new loans worth 30 billion baht this year.
Mr Chaiwat said the bank also aims to make a profit this year after net losses in recent years.
“We must make a profit this year, even if it’s only one baht,” he said.
The bank suffered net losses of 9.54 billion baht in 2014, 4.59 billion in 2015 and 3 billion last year.