Promising outlook for sultanate’s fledgling Islamic finance industry (By IFN)

OMAN: The sultanate may have been slow to jump on the Islamic finance bandwagon, but the promising potential of its fledgling Shariah compliant finance industry has caught the eye of the likes of investment giants such as Abu Dhabi’s sovereign wealth fund, Aabar Investments.
The sovereign fund, which in June last year acquired a 24.9% stake in Malaysia’s RHB Capital, announced plans to invest heavily in Al Izz Islamic Bank, one of Oman’s two pioneering fully-fledged Islamic banks.

Aabar is a cornerstone investor in Al Izz; for which the fund is a joint promoter with local trading company, Huriah Company and Abu Dhabi-based Tasameem Real Estate Company.
According to Mohamed Badawy Al-Husseiny, CEO of Aabar, the fund’s investment in Al Izz will be among its largest in the Middle East.

“It builds on our significant investments in financial services in key European and Asian markets and affirms our confidence in the outlook for Oman and wider Gulf financial services markets,” he noted.

Meanwhile, Bank Nizwa, the sultanate’s other pioneer Islamic bank, sees a bright outlook in pulling Omani funds that have been deposited into Islamic banks outside the sultanate back to their home market. Dr Jamil El Jaroudi, its CEO, estimates that Omani funds held in Islamic banks in markets such as Bahrain and the UAE amount to between OMR3.5-5 billion (US$9.1-12.9 billion).

The sultanate’s conventional lenders, such as National Bank of Oman and BankMuscat, are also joining in the Islamic banking push, with all eyes now on BankMuscat’s performance in the Shariah compliant space, given its leading position in conventional market.

While Oman has lagged behind in offering Islamic financial services, the sultanate is set to be the market to watch going forward, as its local players appear determined to play catch-up with regional neighbors.

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