All Omani banks to instate Basel III norms

Published April 23rd, 2012 - 12:22 GMT
Banks have been freely able to tap long term CDs and bonds locally
Banks have been freely able to tap long term CDs and bonds locally

The latest global regulatory standards on bank capital adequacy, stress test and market liquidity risk called 'Basel III' will be introduced for Omani banks by the Central Bank of Oman (CBO) next year. "A road map has already been finalised and revised rules shall accordingly be finalised by December 2012 and implementation in 2013 onwards in accordance with the timeline set under Basel III," said Hamoud Sangour Al Zadjali, Executive President of CBO.

The third Basel accord was developed in response to the deficiencies in financial regulation revealed, in the aftermath of the global financial crisis. Addressing the third Oman Economic Forum (OEF) here yesterday, the CBO chief said the new regulatory standard broadly covers enhancing the definition of capital, raising minimum capital requirements and introducing the counter cyclical capital buffer regime, enhancing the risk coverage of the capital framework and implementing leverage ratio, liquidity coverage ratio and net stable funding ratio. "I can assure that banks in Oman shall have no impediment in meeting the Basel III norms, at the same time keeping up their credit dispensation potentials," noted Sangour.

Sangour said the banking regulator is updating itself and banks on challenges ahead by way of aligning themselves with best practices elsewhere and market requirements. "Oman has been steadfast in meeting Basel II norms, thanks to the cooperation of banks." Omani banks are also well prepared to meet other major challenges in terms of technology, reach and innovations needed. Prudential requirements have ensured that there will not be any set back in the growth process. The CBO chief also said that the advent of Islamic banking through new banks and windows of existing banks will, no doubt, add to the size and diversity of banking operations in Oman. The banking industry in Oman is committed to commencement of Islamic banking in a very enthusiastic manner. Formal legal and other authorisations are expected shortly. The CBO will continue to urge that productive/growth-oriented finance needs should be given top priority. "Good amount of capital is expected to be earmarked for the healthy growth of Islamic banking business with two new banks alone coming up with capital of RO250 million."  

Oman banking sector has done well over the years. Even the financial crisis elsewhere did not affect it much and growth has been sustained. In 2011, assets have grown by 17 percent, deposits by 19 percent and credit by 16 percent. With regulatory capital of over RO2.6 billion, capital adequacy ratio of 15.9 percent, proposed retained earnings and right and other issues along with ample liquidity available in the system, there is no doubt that banks in Oman are well prepared to meet the credit needs of the growing economy. Oman banks have been active in international markets. In terms of long term funding sourcing, they have no difficulties in mopping up required additional resources.

Banks have been freely able to tap long term CDs and bonds locally. "Project funding will continue to receive due attention." The two-day-long Oman Economic Forum was conducted under the patronage of His Highness As'ad bin Tariq bin Taimur Al Said, Representative of His Majesty Sultan Qaboos. Tony Blair, Former Prime Minister of the United Kingdom, and Fuad Siniora, Former Prime Minister of Lebanon, also addressed the forum.

© Muscat Media Group

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