The cabinet on Tuesday gave the nod to raising the registered capital of state-owned Islamic Bank of Thailand (IBank) by 16.01 billion baht to strengthen the bank's financial status and attract potential partners.
The new funding will bring IBank's registered capital to 18.10 billion baht. The capital raise will be financed by the Specialised Financial Institutions Development Fund.
After the increase, IBank will be 99.71%-held by the Finance Ministry. The ministry currently holds a 48.5% stake, while the Government Savings Bank holds 39.8%, Krungthai Bank 9.83% and other shareholders the rest.
IBank is one of seven state enterprises forced into business rehabilitation after accruing high non-performing loans and net losses.
The other six are Thai Airways International, the State Railway of Thailand, the Bangkok Mass Transit Authority, TOT Plc, CAT Telecom and the Small and Medium Enterprise Development Bank of Thailand.
SME Bank exited its rehab plan after earnings turned a corner.
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 from the Specialised Financial Institutions Development Fund.
According to Nathporn Chatusripitak, an adviser to the Prime Minister's Office minister, the Specialised Financial Institutions Development Fund was required to inject 5.4 billion baht into IBank on Aug 31 and a further 10.69 billion baht on Sept 3.
But IBank must meet the requirements of the State Enterprises Policy Committee by providing 8 billion baht in loans this year and reducing debt.
After the latest measures, IBank is projected to make an 828-million-baht profit this year, 1.3 billion in 2019, 2 billion in 2020, 2.8 billion in 2021 and 3.9 billion in 2022.
The bank posted a net loss of 3 billion baht in 2017, following losses of 3.5 billion in 2016, 4.6 billion in 2015 and 9.5 billion in 2014.
The Finance Ministry will reduce its holding to 49% once IBank acquires new partners, Mr Nathporn said.