Wednesday, Nov 16, 2011
--Bank Muscat plans to raise U.S. dollar subordinated debt
--Discussions with International Finance Corp taking place about $170 million debt
--Transaction subject to IFC board, Oman regulator approvals
(This story was originally published Tuesday.)
By Tim Falconer
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--In a move aimed at bolstering its capital base, Bank Muscat (BKMB.ON), Oman's largest lender by market value, said it is in discussions with Washington-based International Finance Corporation, or IFC, to secure $170 million in subordinated debt.
The lender, in a statement posted on the Muscat bourse Tuesday, said the transaction is subject to the approval of IFC's board of directors and Oman regulators.
"This investment by IFC is designed to strengthen the bank's capital position and support long term USD funding and asset growth," Bank Muscat said.
The Muscat-based lender last month posted a 19% rise in third quarter profit but said impairments for credit losses for the first nine months of 2011 surged to OMR40.9 million, from OMR30.1 million in the year ago period.
The International Finance Corp., or IFC, traditionally invests to help companies and financial institutions in emerging markets create jobs, generate tax revenues, improve corporate governance and environmental performance.
Bank Muscat's move to raise more U.S. dollar debt makes sense as it is relatively cheaper, said Joice Mathew, senior manager for research at Muscat-based United Securities. It will also serve to boost Bank Muscat's capital adequacy ratios, he added.
"There is an increased demand for USD funding in Oman as borrowing in the local currency is more expensive. Moreover, banks are anticipating a strong demand for low-cost customer borrowing," said Mathew.
Bank Muscat shares last traded flat at OMR0.717.
-By Tim Falconer, Dow Jones Newswires; +9714 446-1690; tim.falconer@dowjones.com
(Nikhil Lohade in Dubai contributed to this article.)
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
16-11-11 0350GMT
