MUSCAT, 2 January 2011— IFC Capitalization Fund will invest $170 million in subordinated debt in BankMuscat, the largest commercial bank in the Sultanate of Oman, to strengthen its capital base and help increase access to finance for small and medium enterprises (SME) and middle-income home buyers. The $170 million subordinated loan agreement was signed between IFC Capitalization Fund and BankMuscat on 29 December.
IFC Capitalization Fund is a global equity and subordinated debt fund founded by International Finance Corporation (IFC), a member of the World Bank group, and the Japan Bank for International Cooperation. It aims to support banks considered vital to the financial system of emerging market countries.
The investment will provide long-term capital resources to BankMuscat as it continues to expand its financial services. The facility is focused on expanding operations of Al Wathbah, the Bank's small and medium enterprises (SME) division, and baituna, the housing finance unit. It will also support cross-border investments within the region, facilitating greater economic and financial integration.
AbdulRazak Ali Issa, Chief Executive of BankMuscat, said: "BankMuscat is proud to consolidate the strategic relationship with IFC through this transaction which enables us to further extend financial services to SMEs and middle-income homebuyers and thereby contribute to the socio-economic development in Oman. The support to SMEs will lead to job creation while finance to households will create social stability."
In 2006, IFC provided BankMuscat with a $100 million subordinated loan to support its housing finance programme, along with advisory services to SME businesses.
“This investment will strengthen BankMuscat's capital adequacy and bring further confidence to investors looking for opportunities in the region," said Marcos Brujis, head of IFC Capitalization Fund. “We look forward to partnering with BankMuscat to support the further development of the banking sector in the Middle East."
“BankMuscat is a key partner for IFC in expanding access to finance for SMEs and housing, key sectors for economic growth and job creation," said Mouayed Makhouf, IFC Director for the Middle East and North Africa. “IFC and IFC Capitalization Fund's support to a longstanding partner during a challenging time demonstrates our confidence in and commitment to the region."
IFC, a member of the World Bank group, is the largest global development institution focused on the private sector in developing countries. We create opportunity for people to escape poverty and improve their lives. We help developing countries achieve sustainable growth by financing investment, providing advisory services to businesses and governments, and mobilizing capital in the international financial markets. In fiscal 2011, amid economic uncertainty across the globe, we helped our clients create jobs, strengthen environmental performance, and contribute to their local communities—all while driving our investments to an all-time high of nearly $19 billion. For more information, visit www.ifc.org
About IFC Asset Management Company
IFC Asset Management Company LLC, a wholly-owned subsidiary of IFC, invests third-party capital, enabling outside investors to benefit from IFC's expertise in achieving strong equity returns as well as positive development impact in the countries in which it invests. It manages the $3 billion IFC Capitalization Fund and the $1 billion IFC African, Latin American and Caribbean Fund.
About Japan Bank for International Cooperation
The Japan Bank for International Cooperation (JBIC) is the international wing of the Japan Finance Corporation, Japan's policy-based financing institution established on October 1, 2008. It succeeded International Financial Operations of the former JBIC and will continue to use the name JBIC to maintain international trust and confidence it has gained. JBIC provides policy-based finance with a mission to contribute to the sound development of the Japanese and international economy, including finance responding to disruptions in financial order in the international economy. For more information, visit www.jbic.go.jp/en/
BankMuscat is the largest bank in the Sultanate of Oman, and enjoys a 40 per cent market share in Oman, with over $16 billion of assets, capital of over $2 billion and a customer base of over 1.2 million. It is listed in the Muscat, Bahrain and London Stock Exchanges and is rated A1 by Moody's and A- by Standard & Poor's. The bank has an extensive network of branches in Oman, as well as direct and indirect presence in all six GCC states as well as an office in Singapore which focuses on financial institutions and trade business. BankMuscat provides corporate, retail, investment banking and asset management services. For more information, visit www.bankmuscat.com
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