02 October 2006
MUSCAT -- As expected, the Central Bank of Oman (CBO) has come to the rescue of banks. The apex bank's board of governors, whcich met here yesterday, approved a request from BankMuscat, BankDhofar and Oman Arab Bank to convert their debts with regard to the National Rice Mills (NRM) into equity.
"In fact, banks have got some breathing space with the CBO approving their request to convert the remianing debts into equity. This is an exceptional case, and banks will now own a majority shareholding in the equity of NRM.
"Article 65 of the Banking Law restricts individual investments made by a licenced bank in shares and securities of corporations to 'five per cent' of the paid-up capital of a particular corporation, and that all such investments put together should not exceed 20 per cent of the net worth of a licenced bank," a senior banker opined. "It's a very positive decision. NRM as such was a loss making entity. The authorities deserve praise as this decision adds value to Oman's corporate sector. We need companies to exist, and this can be a viable model for sick companies, if any, that are facing problems with banks. We wish all the best to the management of NRM," a former shareholder of NRM said.
It s learnt that banks already own a significant shareholding in the company's equity, and the restructuring, is expected to add an additional two million rials (unofficial) or so.
The board also approved clauses addressing the country's banking system in the event of the free trade agreement between Oman and the US. The board has also discussed the International Monetary Fund and the World Bank recommendations that urge evaluation of the country's financial sector.
The meeting has approved the annual budget of College of Banking and Financial Studies for the year 2006-2007 and reviewed a report on the activities and performance of the instituion during the academic year 2005-2006.
The board also examined a request from BankMuscat which had sought the CBO's approval to subscribe to the capital of an Indian financial intermediary company. The board has decided to ask the bank to provide additional financial data and facts on the company before giving an approval. Dr Ali bin Mohammed bin Moosa, minister of health and deputy chairman of the board of governors of the CBO, presided over the meeting.
MUSCAT -- As expected, the Central Bank of Oman (CBO) has come to the rescue of banks. The apex bank's board of governors, whcich met here yesterday, approved a request from BankMuscat, BankDhofar and Oman Arab Bank to convert their debts with regard to the National Rice Mills (NRM) into equity.
"In fact, banks have got some breathing space with the CBO approving their request to convert the remianing debts into equity. This is an exceptional case, and banks will now own a majority shareholding in the equity of NRM.
"Article 65 of the Banking Law restricts individual investments made by a licenced bank in shares and securities of corporations to 'five per cent' of the paid-up capital of a particular corporation, and that all such investments put together should not exceed 20 per cent of the net worth of a licenced bank," a senior banker opined. "It's a very positive decision. NRM as such was a loss making entity. The authorities deserve praise as this decision adds value to Oman's corporate sector. We need companies to exist, and this can be a viable model for sick companies, if any, that are facing problems with banks. We wish all the best to the management of NRM," a former shareholder of NRM said.
It s learnt that banks already own a significant shareholding in the company's equity, and the restructuring, is expected to add an additional two million rials (unofficial) or so.
The board also approved clauses addressing the country's banking system in the event of the free trade agreement between Oman and the US. The board has also discussed the International Monetary Fund and the World Bank recommendations that urge evaluation of the country's financial sector.
The meeting has approved the annual budget of College of Banking and Financial Studies for the year 2006-2007 and reviewed a report on the activities and performance of the instituion during the academic year 2005-2006.
The board also examined a request from BankMuscat which had sought the CBO's approval to subscribe to the capital of an Indian financial intermediary company. The board has decided to ask the bank to provide additional financial data and facts on the company before giving an approval. Dr Ali bin Mohammed bin Moosa, minister of health and deputy chairman of the board of governors of the CBO, presided over the meeting.
By Special Correspondent
© Times of Oman 2006
