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Summary of Project Information (SPI)

This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.
Project number24953
Project nameBank Muscat
SectorCommercial Banking - Housing Finance
Environmental categoryC
Date SPI disclosedApril 5, 2006
Projected board dateMay 18, 2006
Previous EventsInvested: June 28, 2006
Signed: June 10, 2006
Approved: May 25, 2006

Description of company and purpose of project
The project is to provide a long-term subordinated loan of $100 million to BankMuscat (S.A.O.G.) (“BankMuscat” or the “Bank”), the largest commercial bank in Oman with a market share of around 37%. The proceeds of the loan will be primarily utilized to strengthen the Bank's capital base and support the Bank's long-term mortgage financing. The proposed project is subject to the Bank obtaining necessary regulatory approvals

Project sponsor and major shareholders of project company
With total assets of about $5.2 billion, BankMuscat is the largest Bank in Oman and maintains a strong presence in Corporate Banking, Retail Banking, Investment Banking, Treasury, Private Banking and Asset Management. The Bank has a network of 90 branches in Oman and a representative office in Dubai (UAE). The Bank has a 25% stake in Centurion Bank of Punjab, a private sector bank in India and a 49% stake in BankMuscat International, a recently formed bank in Bahrain by. The Bank is rated BBB by Standard&Poors and Baa1 by Moody’s, similar to the sovereign rating of Oman.

As of February 2006, the following shareholders held 5% or more of the Bank’s capital:

Royal Court Affairs 20.06%
Sheikh Mustahil Ahmed Al Mashani and Group Companies 13.15%
Société Générale’s 9.16%
Pension Funds 13.40%
Public and Others 44.23%

Total project cost and proposed IFC investment
The proposed IFC investment is a $100 million subordinated loan for IFC’s own account.

Location of project and description of site
The Bank is located in Muscat, Oman.

Project Development Impact and IFC's Role
Expand Housing Finance Market:

The project is expected to support IFC’s strategy in the development of the housing finance market in the GCC and to extend the average maturity of mortgages in the country. The latter would make housing more affordable to new segments of the population who cannot service short-term housing loans with their current income levels.

Foster Capital Market Development:

The project is expected to support the expansion of local capital markets and of investment opportunities in Oman in two ways: (i) through further development of a primary mortgage market and (ii) via the use of structured finance products to support BankMuscat’s future mortgage bonds and securitization issues in the local/regional capital market.

IFC Role: BankMuscat is focused on three strategic directions:

- regional expansion;
- long-term housing finance, and
- SME banking.

The combination of investment and the proposed TA is designed to address all three areas. The Tier II Capital will provide the bank with stable, long-term funding to support overseas expansion, grow its portfolio of domestic housing loans, while the TA from IFC will enable the Bank to develop its SME lending program. IFC will bring to bear, thorough the proposed technical assistance project and IFC investments, its worldwide experience on working to develop a suitable environment for private sector based housing finance solutions. IFC’s provision of such long term loan will further stabilize, diversify, and extend the maturity of the Bank’s funding base, which will allow BankMuscat to extend the tenor of the housing loans.

Environmental and social issues - Category C
This is a Category C project according to IFC’s environmental review procedure. The Bank will be required to adhere to IFC’s exclusion list. No further environmental review is required.

To contact the project company, please write to:
Name Sulaiman Al Harthy
Tel. Number +968 247 00179
Fax Number +968 247 02013
Address P.O. Box 134 Ruwi, P.C. 112, Sultanate of Oman

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