Bank Nizwa signs USD 50 million shari'a-compliant financing agreement with Hydrocarbon Finder E&P LLC

Bank Nizwa SAOG has signed an agreement to provide a structured financing facility of USD 50 million to Hydrocarbon Finder E&P LLC (HCF), an independent Oil & Gas exploration & production company. The Bank's Shari'a-compliant package is tailored to meet the requirements of HCF, which has been granted concession rights by the Government of Oman for oil & gas exploration, development and production within an onshore geographical area in Oman termed as Block 7. Hydrocarbon Finder E&P LLC is part of the Services & Trade (S&T Group), an Oman based business conglomerate. The Facilities agreement was signed by Dr. Jamil El Jaroudi, CEO of Bank Nizwa and Brig. Gen. (Retd) Sulaiman Al Adawi, Group Chairman of the S&T Group, on February 10th in Muscat.

Omantel says scraps plans to issue $130 mln dual-currency sukuk

Oman Telecommunications Co (Omantel) has scrapped plans to issue a $130 million five-year dual-currency sukuk, the former monopoly said. Last month, the state-run company priced the sukuk at a profit rate of 5.3 percent, having received commitments worth $82.16 million in the dollar tranche and 18.4 million rials ($47.86 million) in the rial tranche. But Omantel has shelved plans to issue the sukuk at the present time, it said in a statement to Muscat's bourse. The company said it took this decision following discussions with its advisers, but did not elaborate.

Omantel sukuk evokes strong response

Book-building process for the Omantel sukuk via private placement is currently being done. The proposed OMR50 million issuance is the country’s first multi-denominated sukuk, offered in both Omani rials and US dollars. The bankers have been holding one-on-one meetings with key investors, and said that the issuance is gathering pace amongst both Omani and international investors. The sukuk will have a tenor of 5 years and mature in 2021. The minimum subscription amount for the sukuk is OMR100,000 or $260,000. The profit rate on the sukuk will be set through a uniform price auction and will be finalised upon closing of the subscription period. Interested investors can get further information on the sukuk from the Investment Banking Division of National Bank of Oman who are acting as the issue manager and collecting bank. Subscription closes on January 26.

Islamic banks post solid finance growth

Oman’s Islamic banks and window operations recorded a major growth of 65.9 per cent at OMR1.5 billion for the first nine-month period ending September 2015, compared with the same period of the previous year. Two Islamic banks and window operations of conventional banks have offered new products to lure in Omani customers, besides opening several branches in different parts of the country. The total value of customer deposits with Islamic institutions shot up by 210 per cent to OMR1.3 billion by the of September, from only OMR429.7 million for the same period of last year, according to fresh data by the Central Bank of Oman (CBO). There has been a significant increase in number of branches and assets held by these institutions since almost two year.

Intellectual capital most important in Islamic banks

The main challenge faced by the Islamic banking in the Sultanate today is building up solid knowledge and experience among bankers about Islamic finance while keeping pace with the demand in the market. "Recruiting potential front-runners in this area and providing the right knowledge dosage at the right time is key success element. Retention is always a challenge in the banking sector and it is rather more intense towards persons who already started working within Sharia-compliant products and practiced Islamic banking", said Mohammed al Balushi, Chief Human Resources Officer at alizz Islamic bank.

Powerhouse partners from across global Islamic financial ecosystem joining World Islamic Banking Conference

More than 1200 distinguished guests from more than 45 countries and 300 organizations participating this December, Bahrain

Key players from the global Islamic finance industry will be participating with the 22nd annual World Islamic Banking Conference (WIBC) 2015, taking place on the 1st, 2nd and 3rd of December at the Gulf Hotel, Bahrain. Focusing on 'New Realities, New Opportunities', WIBC will play host to more than 1200 leaders including Central bank governors, regulators, C-suite bankers & asset managers, policy makers, Fintech entrepreneurs and contemporary thought leaders.
WIBC 2015 will host 5 central bank Governors and deputy governors and feature speeches and discussions by the Governor of the Central Bank of Bahrain, H.E. Rasheed Al Maraj, the Executive President of the Central Bank of Oman, H.E. Hamood Sangour Al Zadjali, Deputy Governor of the State Bank of Pakistan, Riaz Riazuddin and the Deputy Governor of the National Bank of Kazakhstan, Nurlan Kussainov.

Oman Sees Islamic Banking Growth

Since regulations were finalised in late 2012, Oman's Islamic banks have been the most dynamic part of the banking sector and are expected to take an ever more significant share of the overall market in the next few years. Mik Kabeya, analyst in the financial institutions group of Moody’s Investors Service estimates that the asset base of Oman’s Islamic banking sector grew by 68 per cent in 2014, compared to growth of 11 per cent in the conventional banking arena. Islamic banks could account for around 10 per cent of the banking sector’s asset base within 2-3 years, compared to around 6 per cent at the moment. Earlier this year the Muscat government also said that it would issue its first sovereign sukuk.

Oman’s first sovereign sukuk issue attracts strong orders

Oman’s first issue of sovereign Islamic bonds has received strong orders ahead of its final pricing on Tuesday. The 200 million rial (Dh1.9 billion, $520 million), five-year sukuk issue with an ijara format drew 22 orders totalling 336 million rials during the subscription period, which ran from Oct. 8 to 22, Mohammed Hussain Jawad, adviser at the finance ministry and head of the committee handling the issue, said. Results of the sale and allocations will be announced on November 3. Jawad also said the ministry planned a second sukuk issue next year, but he did not elaborate on the size or timing.

Maisarah Islamic Banking Services to fund construction of Muscat hotel

Maisarah Islamic Banking Services signed an agreement with Shaza Oman to fund the construction of its flagship five-star hotel in Muscat. The financing agreement was signed by BankDhofar's acting Chief Executive Officer Abdul Hakeem Al Ojaili; Al Madina Real Estate CEO Abdul Rahman Ba Omar; and GLOREI CEO Mohammad Al Ghassani. Under the agreement, Maisarah will finance the five-star hotel that is under construction by Shaza Oman Company SAOC. The project is in Al Khuwair, adjacent to Muscat Grand Mall, and is slated for a soft launch in December.

Oman to sell first sukuk on October 8

To expand its capital market, Oman will sell its first sovereign Islamic bond this week, the sultanate’s Ministry of Finance has announced. The country will open subscriptions for its first issue of sovereign sukuk on October 8 and close them on October 22. The rial-denominated issue will have a tenor of five years and will mature in 2020, with its profit rate set through a uniform price auction, according to the ministry. The issue will be open to sophisticated investors – usually taken to mean fund managers, banks and other institutions, as well as wealthy individuals – with a minimum subscription of OMR500,000 ($1.3 million).

Call to dispel Islamic banking misconceptions in Oman

There are some misconceptions about Islamic banking in Oman, which need to be dispelled through raising awareness about this sector, Dr Jamil El Jaroudi, chief executive officer of Bank Nizwa said. El Jaroudi noted that they do not want to simply replicate what is out there in the conventional banking and continuously try to innovate and build an industry based on Sharia objectives, and not necessarily just to be Sharia-compliant. However, during the initial phase, they do have to provide alternatives to the current conventional products to suit the demand of customers, he added. Another misconception is that Islamic banking is similar to a social philanthropic entity. Nevertheless, Islamic banks are commercial and profit oriented businesses.

Bank Muscat Meethaq upgrades Islamic core banking system

Meethaq has upgraded its core banking system, resulting in a host of Islamic banking services covering ATM/CDM, debit card and mobile banking for Meethaq customers. Meethaq now functions with the new iMal core banking system. The implementation of the system is the result from the partnership between the bank and Path Solutions. iMAL is a Shari’ah-compliant core banking system certified by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). It is an integrated, modular Islamic banking suite with full functionality, including retail, corporate, investment, trade finance, and treasury modules.

Islamic windows should become full subsidiaries: Bank Nizwa CEO

More full-fledged Islamic banks are needed and the Islamic banking services of conventional banks should be converted into full subsidiaries if Oman were to fully embrace the Islamic finance concept in its entirety, says Dr Jamil El Jaroudi, CEO at Bank Nizwa. It would also eliminate potential regulatory arbitrage between conventional banking and Islamic banking that could harm or raise doubt on the Sharia aspects, he added. The Islamic windows' cost of doing business and relying on their parent banks’ infrastructure resulted in a disadvantage for the business of fully-fledged banks. Nonetheless, the windows have yet to reach their critical sizes to be able to justify conversion into standalone banks.

Business interview: Takaful industry has great potential in Oman

Datuk Dr Mohd Daud Bakar is the founder and executive chairman of Amanie Advisors. He chairs the Sharia'a Advisory Council at the Central Bank of Malaysia, the Securities Commission of Malaysia. A Sharia'a board member on various financial institutions in Malaysia and the Middle East, Dr Bakar is also deputy chairman on the board of Al Madina Takaful in Oman. Dr Bakar was recently in Muscat to attend Al Madina's Sharia'a board meeting. He spoke about the global Islamic finance industry and shared his views on the outlook for Oman's Islamic banking and takaful markets. He said that in Oman, awareness needs to be spread at all levels through all available channels.

Oman’s Islamic banking sector records robust growth during the first half of 2015

Helped by growing awareness of Sharia’a-compliant banking services and increasing number of branches, the Islamic banking sector in the sultanate recorded robust growth during the first half of 2015. The combined assets of the sector surged 64 per cent to RO1.83bn as of June 30, 2015 against RO1.11bn a year ago. Islamic banking now accounts for 6.3 per cent of the total banking assets in Oman. Total financing by Islamic banks and windows jumped by 85 per cent to RO1.38bn from RO745mn. Oman's Islamic banking sector comprises two fully-fledged Islamic banks (Bank Nizwa and alizz islamic bank) and six Islamic banking windows of locally incorporated commercial banks.

Bank Sohar appoints new head of Islamic banking

Bank Sohar has appointed Salim Khamis Al Maskari, the former senior assistant general manager of branches, as the head of Sohar Islamic, Bank Sohar’s Islamic banking window. Prior to joining Bank Sohar in 2007, Salim Al Maskari had worked as the district manager of the Sharquiyah region for Oman International Bank and later moved to Bank Muscat as the regional manager of the north capital region. He has more than 29 years of experience in the banking sector in Oman and holds a Master of Business Administration from the University of Hull, UK. He also completed his Certification in Islamic Banking and Takaful Products (CIMA) examinations in 2015.

Oman central bank rejects Bank Muscat's $1.3 bln sukuk plan -source

Bank Muscat, Oman's largest lender, has delayed plans to launch a 500 million rial ($1.3 billion) sukuk programme after the central bank rejected the proposal, a source at the bank said. The regulator informed Bank Muscat in writing that it would not accept the plans in their current form, which involved the lender asking for a single approval to issue 100 million rials a year for the next five years, the source said, adding that the central bank had concerns over plans to use the sukuk proceeds to increase personal lending. The bank will restructure the sukuk proposal and file for the approval again. The plans for the sukuk to be issued in various tranches was backed by Bank Muscat's shareholders in March.

CBO shows commitment to Islamic banking, says Fitch

Effective regulation and supervision of Islamic banks achieved through a dedicated unit of the Central Bank of Oman (CBO) is positive for the sector as it should strengthen early detection of risks and support growth, Fitch Ratings said. The central bank inaugurated its specialist department for overseeing Islamic banking last week. The department will build up resources and expertise and centralise all aspects of Islamic banking regulation and issuance. Although the industry represents just over five per cent of total banking assets in Oman, it could grow rapidly, as it has in neighbouring countries where market shares range between 20 to 30 per cent, the ratings agency said. The global ratings agency added that a limited number of Omani corporates have issued sukuk and the country's banks may follow.

Oman central bank sets up Islamic banking department

The Omani central bank has established an independent department to handle Islamic banking. The new department will handle all Islamic banking matters, though the existing examination and surveillance departments will continue their supervision of banks. The creation of a separate Islamic banking department appears to clear the way for two steps seen as critical to the long-term development of the industry: issuance of sovereign Islamic bonds, and the introduction of sharia-compliant money market tools. The government has said it plans to sell its first sukuk, an issue of OMR 200m ($520m), in coming months, while a central bank task force has been studying Islamic money market operations.

Bankers in Oman caution against 'excessive consumerism'

Banks in Oman believe that ease of access to financing and a wider range of options have enhanced the experience of customers but also hold the opinion that excessive consumerism should be avoided through educating the society. Yousuf Al Rawahi, deputy general manager - head of branches, retail and private banking at Ahlibank, says that with the ease of available credit, any society will have consumerism, which has to be managed accordingly. However, he says more efforts are required to promote the culture of saving in Oman. Asad Batla, head of consumer banking at Bank Nizwa, believes that the rate of consumption in Oman has witnessed ‘exponential’ growth. He added that Bank Nizwa encourages its customers to have discipline in their financial decisions, while constantly focusing on helping them lead financially-secure lifestyles.

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