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SME Bank close to achieving rehab release

State-owned lender expected out by June

An SME Bank branch in Bangkok. The state-owned bank has improved its operations and reduced its non-performing loans. THITI WANNAMONTHA

The state-owned Small and Medium Enterprise Development Bank of Thailand (SME Bank) is expected to exit its rehabilitation plan by June, thanks to improving operating performance and lower non-performing loans.

Ekniti Nitithanprapas, director-general of the State Enterprise Policy Office, said SME Bank's operating performance has lived up to the requirements set by the State Enterprises Policy Commission (superboard).

According to the requirements of the superboard, the bank can be removed from the list of ailing state enterprises if it manages to lower its NPLs to below 18 billion baht and less than 5% of its new loans turn sour.

SME Bank is among seven state enterprises under rehabilitation. The others are Thai Airways International, the State Railway of Thailand, the Bangkok Mass Transit Authority, TOT Plc, CAT Telecom and the Islamic Bank of Thailand (IBank).

According to Mr Ekniti, SME Bank's current NPLs are below 16 billion baht, while it could provide lending to small and medium-sized enterprises on the target set by the government.

This year, SME Bank was assigned to extend up to 30 billion baht worth of new loans and cut NPLs to 16.6 billion baht.

SME Bank last year provided 34 billion baht worth of new loans and reduced its NPLs to less than 18 billion baht.

The SME Bank suffered a massive net loss of 4.03 billion baht in 2012 before rallying back to net profits of 396 million baht in 2013, 176 million in 2014, 1.24 billion in 2015 and 1.60 billion last year.

According to Mr Ekniti, the superboard yesterday told IBank to find new partners and raise its registered capital by this June, saying the bank's rehabilitation plan has been delayed for too long.

The loss-making IBank has long sought a new partner, though that plan has hit snags as interested investors have requested that the state-owned bank finish recapitalising beforehand to raise its capital adequacy ratio (CAR) to be in line with the Bank of Thailand's minimum requirement of 8.5%.

To reach that requirement, IBank needs to raise its capital by 20 billion baht. The superboard, however, has approved injecting only 18 billion baht into the bank. That injection has yet to be completed.

IBank's CAR now has a negative value of 20%.

Under the bank's rehabilitation plan, the superboard will permit IBank's new partner to hold up to a 74.5% stake in the bank. If the partner wants to own more than that limit, it can seek government approval, and may be initially allowed to hold in excess of the 74.5% limit and gradually reduce the shareholding to the threshold at a later point.

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

IBank was also required to transfer 50 billion baht worth of non-performing loans owed by non-Muslim debtors to a new asset management company, Islamic Asset Management.

The bank suffered net losses of 3 billion baht last year.

In other news, the superboard yesterday approved in principle TOT's proposal to establish a new affiliate company, National Broadband Network, to invest in and operate domestic broadband.

TOT is committed to providing internet broadband to 2,500-3,000 villages this year.

The commission also approved CAT Telecom's plan to set up an affiliate firm, Neutral Gateway Network & Data Centre (NGDC), to invest in and operate international broadband and the data centre.

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