The Islamic Bank of Thailand, or IBank, the country’s only Shariah-compliant bank, has been facing a debt explosion in around 100 “problem accounts” and will now need to restructure these loans. The country’s finance ministry said it is investigating possible corruption at IBank.
The state-owned bank admitted on February 12 that it suffers from non-performing loans that amount to 39 billion baht ($1.3 billion), or about 30 per cent of its outstanding loans.
The state Islamic Bank of Thailand (IBank) has adopted a multi-layer marketing (MLM) strategy to help it achieve a target of at least 50,000 members by the end of this year.
Deputy Finance Minister Wiroon Techapaiboon said IBank is the first bank in the country to adopt such a strategy to expand its customer base.
"Through this strategy, we could easily meet the 50,000-member target. We can even double that goal to 100,000 members by the end of this year," said Mr Viroon.
Looking for a win-win situation, Thai bankers are eyeing to lure Islamic finance investors to pump money into infrastructure projects in Thailand in exchange of gaining a foothold in a nearly untouched market.
"A lot of money has been received by the rise in petrol and that needs to be reinvested," Dheerasak Suwannayos, president of the state-owned Islamic Bank of Thailand, was quoted by Reuters as telling an industry event in Bangkok on Wednesday, June 29.
May 2011 was marked by a comeback of sukuk that are international, USD denominated, listed and GCC originated - a trend expected to persist through June, writes Adnan Halawi, Zawya's fixed income analyst As much as USD4.9 billion worth of sukuk were issued in May 2011, taking the total issued globally in the first five months of 2011 to an estimated USD37.8 billion, a 62% surge compared to USD14.2 billion during the same period last year, according to data compiled by Zawya Sukuk Monitor.
The state-owned Islamic Bank of Thailand plans to issue THB5 billion ($164 million) in long-awaited Islamic bonds, or Sukuk, within this year, bank president Theerasak Suwannayos said Wednesday. The bank is awaiting approval of relevant regulations involving tax and asset transfer fees, he told reporters.
Islamic bond offerings may accelerate in the next 18 months, led by first-time issuers in Asia after the region accounted for most sukuk sold this year, Standard & Poor’s said.
While issuance of securities that comply with Shariah law are down 17 percent globally this year, Asian borrowers issued $5.3 billion, about 68 percent of the total $7.8 billion worldwide, according to data compiled by Bloomberg. Sales from companies in the Persian Gulf dropped 24 percent to $2.5 billion so far in 2010, the lowest level since 2005, after Dubai World, one of the United Arab Emirates three main state-owned business groups, announced plans to restructure debt in November.