Dec 04 2011
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Oman Arab Bank geared up to roll out Islamic banking products
"We have prepared our plan (for opening Islamic banking windows) and are waiting for the Central Bank of Oman to announce rules and regulations on Islamic banking," Abdul Kader Askalan, chief executive of OAB , told Times of Oman.
Askalan said his bank has decided to offer Islamic banking products through two branches. "We will see whether the central bank allows window operations through the existing branches or we need to open dedicated branches."
The Omani banks, which have close association with regional institutions offering Sharia-compliant products like Oman Arab Bank will have an edge in offering these products in the local market. "Our partner Arab Bank has Islamic banking products and they are helping us in framing procedures," added the OAB chief.
The proposed Islamic banks and conventional financial institutions that offer Islamic products through window operation may capture 8 per cent to 10 per cent of the market share of the country's $40-$42 billion banking assets in four to five years time.
Two Islamic banks
The Central Bank of Oman (CBO) has already allowed formation of two Islamic banks -- Bank Nizwa and Al Izz International Bank -- while several existing banks are eager to come out with Sharia-compliant financial products.
Unlike traditional banking, Islamic banks provide the entrepreneur with funds for his business venture and get a return based on a pre-determined profit sharing ratio. Oman is the only state, among the six Gulf Cooperation Council (GCC) members, which has not so far set up a bank specifically offering products and services complying with Sharia law.
Referring to a move by the promoters of OAB to divest 25 per cent stake to investing public, Askalan said the bank has already floated a tender for appointing a financial and a legal advisor.
"We will select a financial advisor and a legal advisor for conducting a due diligence to float an initial public offering," he said, adding: "The issue will be floated sometime early next year."
The cabinet has already approved a proposal from Oman Arab Bank ( OAB ) partners to offer 25 per cent stake in favour of investing public. OAB 's move is considered as a special case, since as per the existing law, a company can not go public unless the promoters dilute 40 per cent through an initial public offering (IPO). The Bahrain-based Arab Bank has 49 per cent stake in the Omani bank, while the remaining 51 per cent holding is with Oman International Development and Investment Company (Ominvest).
Oman Arab Bank -- the only non-listed bank in Oman -- has a paid up capital of RO100 million, a net worth of RO147 million and a branch network of 64 branches.
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