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Post by mangomoney on Jun 2, 2016 11:12:17 GMT 7
Islamic Bank puts partner bid on hold
Published: 2/06/2016 at 04:00 AM Newspaper section: Business The state-owned Islamic Bank of Thailand's quest for new partners has been suspended after its negative capital adequacy ratio (CAR) discouraged investors. "The bank has already put a brake on its plan to seek new partners in order to improve conditions to become more attractive," said chairman Chaiwat Uthaiwan. "We will improve our financial position so that our CAR will swing back to positive territory." more... www.bangkokpost.com/business/finance/998445/islamic-bank-puts-partner-bid-on-hold
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Post by Fletchsmile on Jun 2, 2016 11:18:42 GMT 7
Those financial stats and ratios are terrible and some of the worst I've seen for a bank that's still operating. A commercial bank simply wouldn't be allowed to carry on operating like that.
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AyG
Crazy Mango Extraordinaire
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Post by AyG on Jun 2, 2016 11:46:52 GMT 7
The stats (for those who don't know) are: a capital adequacy ratio of -20% (yes, minus), as against the Bank of Thailand's minimum of +8.5% (0.5% more than required under Basel III). To rectify this it requires a cash injection of 24 thousand million baht (equivalent to 674 million US dollars). Operating losses last year were 39 million baht (admittedly better than the previous year's loss of 162 million baht). The cumulative net loss is 4.6 billion baht. Non-performing loans total 40 billion baht.
The latest figures for non-performing loans I can find are for 2013 at 43%, though I believe they were working to reduce that figure.
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Post by Fletchsmile on Jun 2, 2016 13:45:15 GMT 7
Yes. The way the article is written and the chairman's comments also even understate the situation. Chairman: Swing back to positive territory? This makes it sound like it's an acceptable blip. This isn't some sort of profit/loss for the year, where they had a bad year and will turn it around. This is the capital of the bank for gawd's sake. It simply shouldn't be negative.  As mentioned it should be positive and minimum of 8% globally or 8.5% minimum in Thailand. Meaning that for every 100 baht of risk weighted assets for things like loans made they should have at least 8 baht of capital kept back. These folks have negative capital. The real point is the bank has more liabilities than assets. It has more debt than it has assets to pay it with. It's accumulated losses have also wiped out the value of all the shareholders equity, so it has negative equity. That's the way to put this in layman's terms in a newspaper. Bangkok Post: Actually it made a loss at the operating level even before bad debts. The 4.6bn wasn't an "accumulated" net loss, this was broadly the loss for 2015 alone. Driven mainly by bad debt expenses of 4.6bn. The accumulated loss is much higher. It has negative equity of THB 13bn+ , after losing 4.6bn in 2015 and 9.5bn (bank only) the year before, as per its 2015 annual report: www.ibank.co.th/2010/FileUpload/About/annual/FileEn56.pdf |
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AyG
Crazy Mango Extraordinaire
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Post by AyG on Jun 2, 2016 14:17:38 GMT 7
The 4.6bn wasn't an "accumulated" net loss, this was broadly the loss for 2015 alone. Driven mainly by bad debt expenses of 4.6bn. The accumulated loss is much higher. It has negative equity of THB 13bn+ , after losing 4.6bn in 2015 and 9.5bn (bank only) the year before, as per its 2015 annual report: . Thanks for the correction. Still, at least it's another good reason not to convert to Islam and slash the end off my penis. Give me a good, old conventional bank such as ABN Amro, Royal Bank of Scotland, Bear Stearns, Lehmans, Landsbanki or UBS any day. |
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Post by Fletchsmile on Jun 3, 2016 10:01:43 GMT 7
BTW people often see "good" rates on deposits offered by them. Please bear in mind:
IBank is not covered by the deposit protection act (DPA)
It's one of around 8 specialised financial institutions that are state owned and not covered by the DPA. As Ibank is largely state owned its deposits are implicitly guaranteed by MoF and the government. Implicitly not explicitly.
So while they sometimes offer what might appear "good" rates on deposits. Take into consideration the financials, the way the bank is run, no DPA and reliance on an implicit govt guarantee and it's clear why.
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As mentioned it should be positive and minimum of 8% globally or 8.5% minimum in Thailand. Meaning that for every 100 baht of risk weighted assets for things like loans made they should have at least 8 baht of capital kept back. These folks have negative capital.
