Islamic Bank to undergo financial restructuring

The cabinet has given approval to a plan to transfer the Islamic Bank's non-performing loans (NPLsincurred by non-Muslim borrowers to the Islamic Assets Management Company and to reduce the value of the bank's shares to one satang/share to write off its accumulated debts, said Mr Natthaporn Jatusripitak, an advisor to the commerce minister.

The measures are part of the financial restructuring plan designed for the financially-strapped bank. The other measures include recapitalization by the Finance Ministry to the tune of 18 billion baht to be injected into the bank plus the transfer of 473 million baht legal reserves to the bank.

It was reported that Islamic Bank has accumulated 50.2 billion baht in debt which accounts for 50 percent of its assets worth about 100 billion baht. It has also incurred 28 billion baht in accumulated loss, resulting to the bank's debt ratio against assets being placed at 30.64 percent against acceptable ratio of 8.5 percent as set by the Bank of Thailand.

Mr Natthaporn also said that Prime Minister Prayut Chan-ocha had ordered authorities concerned to find out who were responsible for plunging the Islamic Bank into financial crisis so that penalties could be meted out against them accordingly.

It was noted that most of the NPLs incurred by the bank were loans extended to nom-Muslims.

Source: Thai Public Broadcasting Service (Thai PBS)