Islamic finance in Oman poised for solid growth: Bank Nizwa CEO

Islamic financial institutions in Oman are expected to achieve a healthy growth in the banking sector in the near future, said Dr Jamil El Jaroudi, chief executive officer of Bank Nizwa. He also said that Bank Nizwa will open new branches in the Sultanate by the end of the year. The bank was able to reach breakeven in December after three years of operations. In order to reach more potential clients, a mobile branch will travel all-around the Sultanate offering a host of products, services and also make the people aware on the benefits of Islamic banking. The truck’s journey will start from the governorate of Muscat, moving on to Dakhiliyah, Al Sharqiya, Dhofar, Al Batinah and Al Buraimi.

New regulation on sukuk to provide transparency

Oman’s market watchdog Capital Market Authority (CMA) has announced its new sukuk regulation, which includes stipulation on establishing a trustee structure and an LLC company as a special purpose vehicle for issuing sukuk. The regulation, which is effective from Wednesday, also allows structure of the sukuk subject to the approval of respective Sharia Supervisory Board issuer and the choice of the board is left to the issuer. The regulation made rating optional for the issuer and there is no restriction on the sukuk amount to be raised based on the company’s capital. The regulation will complement the existing bond regulatory framework.

Shariah-compliant New Islamic Insurance Law of Oman

Delhi-based Transworld Consultants, a company specialising in laws in the Gulf states, has come out with an English version of the New Islamic Insurance Law of Oman. According to the Chief Executive Officer of Transworld Consultants, Syed Saami Mahmood, the new 58-article Law provides that the companies conducting the Takaful insurance business have to be listed on the Muscat Securities Market with a capital of RO 10 million and above. Mahmood said that the Law does not permit traditional underwriters to open Takaful insurance windows, making it mandatory for a company interested in doing the Takaful insurance in Oman to devote itself exclusively to the Islamic insurance business.

Meethaq highlights role of Islamic finance in economic development

Meethaq organised a series of meetings to highlight the role of Islamic finance in the economic development of Oman. The Shua’a initiative by Meethaq to raise awareness on Islamic economics was attended by members of the Majlis Ash’shura Economic Committee. A similar meeting held in the Higher Judicial Institute in Nizwa was attended by scholars, researchers, entrepreneurs and students. The meetings addressed by senior Meethaq officials covered a wide gamut of areas, including savings account, asset management and project finance. Meethaq is focused on developing as a benchmark Islamic financial institution in Oman and the region.

Islamic banks’ market share in Oman set to touch 10% by 2018

Oman’s Islamic financial institutions are showing robust growth with the value of gross assets touching OMR2.25 billion by the end of 2015, accounting for a 7.45 per cent market share of the total banking industry, said Hamoud Sangour Al Zadjali, executive president of the Central Bank of Oman (CBO). Islamic banks and window operations are expected to ramp up this market share to 10 per cent of the entire banking industry by 2018. The CBO chief said gross finance had also grown to touch OMR1.78 billion by 2015-end, indicating a market share of 8.86 per cent. All these achievements were reported within a short span of about three years, despite teething problems faced by these institutions.


Omani firms plan sukuk issue

Several companies in Oman, including a real estate developer, are planning to issue sukuk or Islamic debt instrument. A real estate company has already approached the market regulator Capital Market Authority for floating a sukuk issue for its second phase development, said Abdullah Salim Al Salmi, executive president of the Capital Market Authority (CMA). However, he declined to name the real estate company that is trying to raise funds by way of a sukuk issue. Al Salmi said that the banks may face liquidity problem and the financial institutions have to issue either sukuk or bond for raising funds to avoid an asset-liability mismatch.

Iranian financial institutions host first GCC-focused Investor Roadshow in Muscat, Oman

Iran’s leading financial conglomerate and senior members of Iranian government bodies met over 150 international investors in Muscat, Oman today to discuss inward investment opportunities across a range of Iran’s sectors and industries. The roadshow was hosted by Sina Financial & Investing Holding Co, Iran’s leading financial holding company. The agenda focused on opportunities created by the re-opening of the Iranian economy to foreign participation, as well as an in-depth discussion of Iran’s capital markets. The roadshow concluded with a business-to-business networking between Iranian and international delegates.

Omantel postpones $130 million sukuk over high interest rates

Oman Telecommunications Co (Omantel) cancelled plans for what would have been a $130 million, five-year dual-currency sukuk issue due to high interest rates from lenders, the company's CEO Talal al-Mamari said. The sukuk was priced last month at a profit rate of 5.3 percent, after receiving commitments worth $82.1 million in the dollar tranche and $47.9 million in the Omani rial tranche. But in a statement Wednesday to Muscat's bourse, Omantel announced it would postpone issuing the sukuk at the present time. Proceeds from the Sukuk would have helped to fund the company's new headquarters and to diversify its investment portfolio. Mamari said Omantel's investments would not stop, but did not give further details.

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.

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