Oman

Dubai: Islamic banking in Oman is growing at a faster rate than conventional banking segment, with Islamic banking assets up more than 62 per cent year on year, according to a recent report issued by the Central Bank of Oman (CBO).

Total assets held by Islamic banks and the Islamic banking windows of conventional lenders in February 2017 amounted to 3.27 billion Omani riyals (Dh31.2 billion), compared to 2.43 billion riyals a year earlier. This took the Islamic banking’s market share from 5.1 per cent of the banking system’s overall assets in 2015 to 10.8 per cent by February 2017.

Banking sector analysts say teething problems of newly established Islamic banks appear to be over and they are on a strong growth trajectory.

“We expect both Bank Nizwa (BKNZ) and 14 per cent Alizz Islamic Bank (BKIZ) to curtail any upward pressure on their costs in a tight operating environment, especially now that their initial investments in infrastructure an human resource development appear to be over,” said Hettish Karmani, Head of Research of U Capital.

Analysts expect these banks to be able to sequentially bring their operating cost-to-income ratio down to the likes of other Omani banks to about 40 per cent, resulting in operating profits to increase at a compounded annual growth rate (CAGR) of 10 per cent for BKNZ and 14 per cent ABKIZ during the forecast period (2017-2021).

Originally published on www.gulfnews.com

Muscat: Alizz Islamic Bank has expressed an interest in a merger with the United Finance Company, which is subject to due diligence of the latter institution.
United Finance Company has forwarded the proposal from Alizz Islamic Bank to its board, the company said in a disclosure statement posted on the Muscat Securities Market (MSM) website.
The merger proposal by Alizz Islamic Bank was mooted after two years of dropping similar proposals by three financial institutions—Al Omaniya Financial Services, National Bank of Oman and Bank Nizwa. All these institutions were looking at consolidating their leadership position in 2015 by acquiring United Finance, which could be a way to achieve inorganic growth.
“No legally binding commitment has been made and the transaction remains subject to approval by the regulators and other stakeholders,” Alizz Islamic Bank said in a separate disclosure statement.
There has been a strong case for merger within the leasing sector in the last two years. “The emergence of Islamic banks has created a situation where the leasing companies have to compete with Islamic banks and window operations of conventional banks. Leasing companies are under pressure and Islamic banks also need assets for growth. So, there is a strong case for a merger,” said a senior market analyst, who did not want to be named.
Consolidation is the best way when there is a slowdown in growth. Also, the majority of assets of leasing firms might be converted into Islamic products since these are all asset-backed.
United Finance’s net profit declined by 34 per cent to OMR757,000 for the first quarter of 2017, against OMR1.15 million for the same period of last year. Total assets of United Finance also dropped by 6 per cent to OMR117.82 million, from OMR125.07 million during the period under review.
Total equity of the company was pegged at OMR43.61 million by the end of March this year, up by 4 per cent, compared with OMR42.11 million for the same period of last year.
Meanwhile, Alizz Islamic Bank shares surged by 2.3 per cent to 89 baisas amidst 1.31 million shares changing hands on MSM.

Originally published on www.timesofoman.com

International law firm Clifford Chance has advised the Government of the Sultanate of Oman on its return to the international debt capital markets with the establishment of an unlimited sukuk-al-ijara trust certificate issuance programme and a drawdown of $2 billion trust certificates due 2024 thereunder.

The transaction settled on June 1 and marks the largest ever sukuk issuance by the Sultanate. The proceeds from the debt-raising enable the Sultanate to meet a significant portion of its expected funding needs for this year. The sukuk was offered and sold in reliance on Rule 144A and Regulation S and was admitted to trading on the Irish Stock Exchange.

This issuance follows the $5 billion triple tranche offering ($1 billion 3.875 per cent notes due 2022, $2 billion 5.375 per cent notes due 2027 and $2 billion 6.5 per cent notes due 2047) issued by the Sultanate in March as well as a total of $4.5 billion bond and sukuk offerings by the Sultanate issued in 2016, which Clifford Chance also advised on.

Stuart Ure, partner at Clifford Chance, said: “The establishment of the trust certificate issuance programme provides the Sultanate with the flexibility to access the capital markets quickly and efficiently. We were delighted to partner with the Ministry of Finance once again to deliver a successful transaction for all parties.”

The Clifford Chance team was led on English law matters through its UAE offices by partner Stuart Ure, supported by senior associate Rafé Khokhar and trainee solicitor Fizel Nejabat, and on US law matters through its Paris offices by US partner Alex Bafi, supported by US senior associate Olivier Plessis and US associate Ryan Bosch. Al Busaidy Mansoor Jamal & Co (AMJ) advised the Sultanate as Omani law counsel.

The sukuk issuance was coordinated by a lead manager group comprised of Alizz Islamic Bank, Citigroup Global Markets Limited, Dubai Islamic Bank, Gulf International Bank, HSBC Bank, J.P. Morgan Securities and Standard Chartered Bank.

Originally published on www.tradearabia.com

Muscat: Alizz Islamic Bank signed an agreement with Oman Oil Refineries and Petroleum Industries Company (Orpic) to provide Islamic financing facilities for the construction of a petroleum coke (petcoke) storage facility at the company’s refinery complex in Sohar.
This is the first agreement of its kind in which Orpic avails sharia-compliant financing. Alizz Islamic Bank offers various structured financing solutions that are designed to meet all the development requirements in various sectors such as in the oil and gas, energy, infrastructure (roads, ports, airports), communications, transport, contracting, machinery, equipment, manufacturing, education, healthcare, tourism and hospitality.
On the other hand, Alizz Islamic Bank has recently received the license for investment banking services and is now actively arranging various sukuk transactions that provide an attractive opportunity for investors to finance projects in Oman. This step is a part of Alizz Islamic Bank’s commitment in providing the diversified banking solutions that supports the Sultanate’s economic strategy.
The agreement was signed on behalf of Alizz Islamic Bank, by Salaam bin Said Al Shaksy, chief executive officer of Alizz Islamic Bank and by Ahmed Saleh Al Jahdhami, chief executive officer of Orpic on behalf of Orpic. The signing ceremony was led by the project finance team at Alizz Islamic Bank, which has extensive experience in providing structured financing solutions that comply with the principles of Islamic Sharia.
The signing ceremony was attended by a number of senior officials from the two organisations.
“We are delighted to partner with Orpic in building its petcoke storage project. The signing of this agreement is in line with Alizz Islamic Bank’s strategy to support and finance various projects in the Sultanate and contribute to the growth of the local economy. Islamic financial institutions have created a variety of banking products and services that meet all the financing needs of government owned entities and corporations operating in Oman,” said Al Shaksy.
“There are a number of projects that our project finance team is actively evaluating in various sectors including manufacturing, logistics, healthcare, mining, tourism, utilities, which are currently in the due diligence stage. All these projects are aligned with Alizz Islamic Bank’s financing strategy and gives us the flexibility to choose amongst the best of these projects. All these projects are of great economic importance to the bank as well as the Sultanate,” added Al Shaksy.
“This agreement with Alizz Islamic Bank will provide us with the groundwork to continue our achievements in the construction of important national projects. Alizz Islamic Bank is one of the important local banks that offers strategic solutions and we are proud to strengthen our relationship with them and build a partnership for future project financing,” noted Al Jahdhami.

Originally published on www.timesofoman.com