Bank Muscat To Raise US$150 Mln Through Private Placement

As part of its capital raising plans to strengthen Tier I capital to support business growth, Bank Muscat, the largest financial services provider in Oman, will raise US$150mn through a private placement of shares in the fourth quarter of this year.

Speaking to reporters on the sideline of Bank Muscat investors meeting at Muscat Securities Market (MSM) on Wednesday, Ahmed al Abri, chief operating officer of Bank Muscat, said that the additional capital will help boost the Tier I capital of the bank to fund business growth resulting from credit expansion.

“The placement will take place at the end of the fourth quarter this year with a party which is an international institution. Looking at the government’s policy of aggressive spending, we are quite optimistic about business growth this year.

“We expect the same level of government spending and business growth in 2013 as well. We are focusing on capital-raising plans for financing growth as we do not dilute earnings and return on equity,” Abri said.

In a private placement, a company sells its shares to an individual institution or selected investors as a way of raising capital. Bank Muscat recently announced a rights issue to raise RO96.7mn. The rights issue will be open from July 9-23.

Abri said that Bank Muscat expects to achieve a 10-20 per cent market share in Oman’s Islamic banking sector over the next three-five years.

“We already have an Islamic portfolio of RO125mn which we started three years ago with a specific approval for Sharia-compliant mortgage finance. This portfolio already exists with the bank and will be a starting point for the bank in Islamic banking,” Abri said.

Sulaiman al Harthy, general manager of Islamic banking at Bank Muscat, said that Bank Muscat’s Meethaq, which will deliver Sharia-compliant products and services, plans to launch a network of seven Islamic banking branches in the first year of operations.

He said, “We have one branch ready to start as soon as banking regulations are announced. In addition, we are setting up six sales centers initially, which will be converted into branches during the first year of operations.

“Islamic banking is expected to have a 10-15 per cent market share in total banking assets in Oman and our target is to attract the lion’s share. However, competition is going to be severe,” according to Muscat Daily.