National Bank Of Oman Plans Islamic Services

National Bank Of Oman Plans Islamic Services

Oman allowed banks to start Islamic operations in 2011; Bank Muscat also plans Islamic banking arm

February 20, 2012 1:42 by Reuters

National Bank of Oman , the sultanate’s second-largest lender by assets, is planning to start Islamic banking operations later this year, its chief executive said, to keep up with rivals .

“We’ve got a whole team working on the Islamic window. We are trying to launch it between the second and third quarter. Of course, the sooner the better for us,” Salaam bin Said al-Shaksy, told Reuters in an interview.

“We are trying very hard to launch it in the second quarter, but we may need a little more time.”

Oman was the last Gulf Arab state to allow banks to offer products and services complying with Islamic law. The central bank changed its stance last May in an effort to keep investment funds in the country and grab a share of the roughly $1 trillion industry.

Bank Nizwa and Al Izz International Bank, sponsored by local investors in Oman, were the first to receive licences from the central bank to operate as wholly Islamic financial institutions.

In December, Bank Muscat, Oman’s largest bank by assets, said it will set up a sharia-compliant banking arm operating under the Meethaq brand name and appointed a three-member sharia board.

Shaksy said last year NBO was considering applying for an Islamic banking licence but that this was subject to board approval.

Asked whether the bank was planning to issue any conventional or Islamic bonds this year, Shaksy said: “This is something that we just put on the table as an option.”

“There are other options which are quite valid at this point in time… So far we have enough ability to go through the year without a bond. But if we see that it is cost effective and it makes sense then we’ll do it.”

The lender reported a 26 percent rise in fourth-quarter net profit to 6.9 million rials ($17.9 million) last month, missing analysts’ forecasts. (Reporting by Martina Fuchs; Editing by Dinesh Nair and Erica Billingham)