Oct 05 2012 |
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Oman's new Islamic banks to face challenges from conventional banks: Fitch
Oman's new Islamic banks will struggle initially to compete with established conventional banks offering Sharia-compliant services through the Islamic windows when the country opens up its Islamic banking market, global ratings agency Fitch Ratings said.In a statement on its website, Fitch said that the combination of well-known brand, an established network, service quality and cost-efficiency savings will give the incumbents a significant advantage over new Islamic banks.
"While there is demand for Islamic banking, and its growth across the Gulf region is likely to outpace that of conventional banking, recent experience from Qatar suggests that customers in Oman will opt to get these services from established banks."
their existing and Islamic operations separate at the point of contact with the customer, there will be plenty of opportunities for cost savings at the operational level," the ratings agency said.
"Where established banks in Oman are allowed to offer both sharia-compliant and conventional products and services, we expect most customers to retain their primary banking relationship, assuming there are no significant differences in the terms on offer," Fitch added.
"We nevertheless recognise that substantial government spending and stimulus will create opportunities for the Islamic banks to expand, primarily in retail banking, where conventional banks are close to regulatory caps, and in real estate and construction related business."
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