Thai to open 1st national Islamic bank next month

Thai to open 1st national Islamic bank next month

Agence France-Presse, Bangkok

Thailand's first national Islamic bank will open next month, initially in the capital of Bangkok and then with branches across the country, its chairman said Thursday.

The Islamic Bank of Thailand will start operations on January 15, with 13 branches planned to open in 2003 including in the Muslim-majority southern provinces of Pattani, Narathiwat, Yala, Songkhla and Satun.

"The bank has offered shares to several financial institutions including the Government Savings Bank and (state-owned) Krung Thai Bank," chairman Aree Wong-araya told reporters.

Shareholders are not allowed to hold more than a 15 percent stake, he added.

The bank is aiming to attract 10 billion baht (US$230.9 million) in capital from both foreign and domestic investors during its first five years, Aree said.

Nopadol Tehaman, one of the bank's directors, said that negotiations between the governments of Thailand and Bahrain, which is interested in snapping up a stake in the bank, are ongoing.

"Bahrain's government has expressed an interest in holding about 50 percent of the shares, but Thai law does not allow (such a high stake)," he said.

During the first year of operation, the bank is expected to attract deposits worth 2.0 billion baht and make investments of about the same size, said board member Bantoon Waitanomsat.

An Islamic bank takes deposits, but raises investment returns through shares and provides depositors with dividends rather than interest payments, which are prohibited under Islamic rules.

The bank invests only in projects deemed appropriate under those doctrines.

There are already a number of government-owned banks providing "window" Islamic banking services, but the new institution will be the first full-fledged Islamic bank.

Muslims are a minority in Thailand, making up less than five percent of the country's 62 million people.