Finance Ministry to hold 99% of IBank

Finance Ministry to hold 99% of IBank

Move meant to attract desirable partners

IBank staff provide services at a money expo. The Finance Ministry is expected to inject B2 billion in the bank. PATIPAT JANTHONG
IBank staff provide services at a money expo. The Finance Ministry is expected to inject B2 billion in the bank. PATIPAT JANTHONG

The government is set to inject 2 billion baht into state-owned Islamic Bank of Thailand (IBank) as soon as there is an announcement of the amended Islamic Bank of Thailand Act in the Royal Gazette, allowing the Finance Ministry to hold more than 49% of the bank.

Piyawan Lamkitja, deputy director-general to the State Enterprise Policy Office (Sepo), said Wednesday a revision to the Islamic Bank of Thailand Act has been passed in the National Legislative Assembly and is awaiting publication in the Royal Gazette.

"The Finance Ministry is set to inject new capital into IBank, strengthening its financial status to attract potential partners," she said.

In May 2017, the cabinet approved allowing IBank to raise its registered capital by 18 billion baht, with 2 billion from the government budget and 16 billion financed by the Specialised Financial Institutions Development Fund.

After the capital increase, IBank will be 99% held by the Finance Ministry.

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

IBank is one of seven state enterprises under rehabilitation after accruing high non-performing loans (NPL) and net losses. The others are Thai Airways International, State Railway of Thailand, Bangkok Mass Transit Authority, TOT Plc, CAT Telecom, and the Small and Medium Enterprise Development Bank of Thailand (SME Bank).

SME Bank exited from its business rehabilitation plan after its earnings turned the corner.

Ms Piyawan said IBank has been on the path to recovery after it transferred 50 billion baht worth of NPLs to Islamic Bank Asset Management Co Ltd (IAM), which is wholly owned by the Finance Ministry, in return for 22 billion baht in promissory notes.

As of May, IBank reported it has offered 3 billion baht worth of loans towards a target of 8 billion.

In a related development, Charnwit Nakburi, deputy director-general of Sepo, said Thailand Future Fund, the state-initiated infrastructure fund to raise liquidity from the public for the construction of state projects and to lower the government's fiscal burden, is expected to be offered to the public by October.

In May 2017 the cabinet approved a proposal to place two expressways as underlying assets for Thailand Future Fund (TFF).

The Chalong Rat Expressway (Ram Intra-At Narong) and Burapha Withi Expressway (Bang Na-Chon Buri, owned by the Expressway Authority of Thailand), will be sold as TFF units.

Some 45% of future revenue from Chalong Rat Expressway and Burapha Withi Expressway, or 44.8 billion baht, will be sold to investors through TFF.

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