IBank close to choosing new partner

Lender seeks exit from rehabilitation plan

State-owned Islamic Bank of Thailand (IBank) is expected to choose a new partner by the end of this quarter, a crucial step in its business rehabilitation plan.

The bank’s rehabilitation of business operations and search for a new partner have made progress, said Piyawan Lamkitcha, deputy director of the State Enterprise Policy Office.

Improving performance and striking a deal with a new partner are important criteria mandated by the Finance Ministry as a requisite for IBank to receive fresh funds.

The Finance Ministry is prepared to pump new capital into IBank to boost its capital adequacy ratio to positive territory, but whether the CAR level will reach the Bank of Thailand’s minimum requirement depends on how much money the partner brings to IBank, Ms Piyawan said.

“We want to take time to ensure we are confident about the business rehabilitation [before injecting new capital in the bank], because we don’t want to repeat the mistakes of the past,” she said.

The State Enterprises Policy Commission approved the ministry injecting 18 billion baht for the bank’s recapitalisation, helping IBank’s capital buffer swing back into positive territory.

Loss-making IBank has long sought new partners, though plans hit a snag as interested investors requested that it finish recapitalising first to raise its CAR to the central bank’s minimum requirement of 8.5%.

IBank’s CAR in the first half of last year was -20%.

The bank is one of seven state enterprises under rehabilitation, as it has been saddled with high non-performing financing (NPF) and net losses.

IBank’s bad loans amounted to 7 billion baht late last year, accounting for 16% of loans outstanding after transferring almost 50 billion baht in NPFs to Islamic Bank Asset Management Co Ltd in exchange for 22 billion baht in promissory notes.

Under the rehabilitation, IBank’s new partner will be permitted to hold up to 74.5% stake in the bank. If the partner wants to own more than that limit, it can seek government approval and may initially be allowed to hold in excess of the 74.5% limit, to be gradually reduced at a later time.

The Finance Ministry holds a 48.5% stake in IBank, Government Savings Bank 39.8%, Krungthai Bank 9.83% and other shareholders the rest.

Local media recently reported that three groups of investors had shown interest in acquiring a sizeable stake in the bank and that Wichai Thongtang, a major shareholder of Bangkok Dusit Medical Services Plc, was among the interested investors.

Vitai Ratanakorn, IBank’s director and acting president, earlier said the bank was expected to turn a corner for the first time in five years in 2018.