BankMuscat to Open Branch in Riyadh

Author: 
Khalil Hanware, Arab News
Publication Date: 
Mon, 2005-11-21 03:00

JEDDAH, 21 November 2005 — BankMuscat’s maiden Global Depositary Receipts (GDR) issue at the London Stock Exchange, which closed in October, received an overwhelming response from the global financial community. Its $163 million GDR offering was oversubscribed several times.

Citigroup, global coordinator and sole bookrunner of the issue that comprised 6.87 million newly issued ordinary shares in the form of GDRs, priced the GDRs at $23.75 (9.144 Omani rials) per share. Each GDR represents one ordinary share of BankMuscat which trades on the Muscat Securities Market.

The bank has become the first commercial entity from Oman and the first bank from the Gulf to be listed on the London Stock Exchange (LSE).

BankMuscat plans to use the proceeds from its GDR issue to finance its aggressive international expansion plans and help strengthen its position in the domestic and regional markets.

“The GDR listing is of very special significance for us at the bank as we’re planning major expansions in the region,” BankMuscat Chairman Abdul Malik ibn Abdullah Al Khalili told Arab News in a telephone interview from Muscat.

BankMuscat has recently been granted approval to open offices in the Kingdom, Al Khalili said. “The Saudi Arabian Monetary Agency (SAMA), the Kingdom’s central bank, has approved BankMuscat’s request for permission to operate in the Kingdom,” he added.

In early 2006, BankMuscat will open its first branch in Riyadh. “Our team has been working for the last year in the Kingdom to complete the formalities and early next year we’ll open the first branch and then expand into other major cities including Jeddah,” he said.

During the GDR launching ceremony, Al Khalili said it was a historic moment for the bank and for Oman as a whole. “We’re indeed proud to be the first Omani organization to represent the Sultanate on the LSE. Our decision to list on the LSE reflects our desire to attract a broad institutional investor base. BankMuscat will use this new capital to finance domestic growth and to consolidate our international expansion.”

The GDR issue, which represents 10 percent of the bank’s existing paid-up share capital, has resulted in the bank’s paid up-share capital increasing from 69 million Omani rials to 76 million rials.

Al Khalili said “BankMuscat holds the rare distinction of being voted the ‘Best Bank in Oman’ four times by The Banker, FT London, five times in a row by Euromoney, and five times by Global Finance Inc. The bank was awarded the ‘People development award’ at the Oman Awards for Excellence in 2003 and 2004. Earlier this year, the bank also won the Gulf Excellence Award for Oman.”

In 2004, the bank achieved the rare distinction of becoming the first bank in the Middle East to be completely ISO 9000:2000 certified. Recently the bank was also declared by Business Today, the country’s leading business magazine, as the Best Place to Work in Oman.

BankMuscat, with assets of over $4.8 billion, has reported a 39 percent jump in net profit to 34.1 million riyals for the first nine months of this year, up from 24.5 million rials a year ago. The bank has also reported a nearly 37 percent jump in net profit for the third quarter (July-September) this year. BankMuscat has made a net profit of 13 million rials in just three months as against 9.5 million rials posted for the corresponding period last year. The bank made a net profit of 21.1 million rials for the half-year ended June 30, 2005.

Al Khalili said Moody’s Investors Service has upgraded the long- and short-term foreign currency deposit ratings of BankMuscat to Baa1/Prime-2 (P-2) from Baa3/P-3 and the foreign currency senior unsecured debt rating of BM to Baa1 from Baa3. At the same time, Moody’s has also upgraded the long- and short-term local currency debt ratings of BM to Baa1/P-2 from Baa3/P-3. These rating actions follow Moody’s recent upgrade of Oman’s foreign and local currency country ceiling for bonds and bank deposits to Baa1/P-2 from Baa2/P-2. The outlook for the local and foreign currency deposit and debt ratings is stable. By the same action, Moody’s has also changed the outlook on the D+ Financial Strength Rating (FSR) of BM from stable to positive.

BankMuscat’s market share was about 37 percent by total loans and 36 percent by total assets as of June 30, 2005.

The bank currently has a network of 90 branches in Oman and a representative office in Dubai. BankMuscat also has a strategic stake in Centurion Bank, a private sector bank in India with a strong retail presence across India and has recently set up BankMuscat International (BMI) an independent banking entity focused on becoming a truly GCC regional bank.

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