Bank Muscat may acquire National Life

Bank Muscat, Oman's largest bank with assets over $3.5 billion, is eyeing the country's largest life insurer, National Life - an Onic Holding subsidiary. Bank Muscat already holds 2 per cent stake in National Life. Another stake is held by American Phoenix Life & Reassurance Co, the fourth largest life insurer in the U.S.

The largest chunk is owned by Onic Holding. Meantime, American Phoenix is said to be keen to increase its stake in National Life from about 5 to 25 per cent this year itself. If Bank Muscat acquires the Onic Holding stake in National Life, which commands almost 50 per cent of the life insurance market in Oman, the bank will become the majority shareholder in the company.

In Oman, banks are not supposed to hold more than a 5 per cent stake in any other entity. However, Bank Muscat is said to be in the process of arranging special approval for this from the authorities.

National Life claims almost two-thirds of group life insurance and one-third of the individual life market in the country. It had plans to increase its capital from RO3.75 million in order to help Phoenix acquire 25 per cent holding in the increased equity of the company. The authorised capital is RO10 million.

Interestingly, Bank Muscat's 'Onic Holding connection' began last last year with the Commercial Bank of Oman (where Onic Holding commanded a controlling stake), merged with Bank Muscat to form the largest bank in terms of assets in Oman.

Onic Holding used to be a financial giant with its hands in almost all financial services activities in the country until it started losing its shine in 1998. The new move might have been triggered by the fact that the bank has a large exposure to the beleaguered Onic Holding, which informed sources say is upwards of RO10 million.

The Omani bank is also finalising the takeover of a leading brokerage - Al Ahlia Securities, another subsidiary within Onic Holding group. With the deal on Al Ahlia Securities, Bank Muscat will become the second bank in the country with a broking license, the other being National Bank of Oman (NBO).

The other deal Bank Muscat is currently pursuing is in India by converting its branch there into a joint venture bank. According to highly placed sources, Bank Muscat's talks with India's IDBI Bank for this is at an advanced stage. The Indian operations of the bank have reported a net profit of Dh1.65 million last year.

It has a deposit base of Dh109.85 million and advances of Dh68 million as on March 30, 2001. The capital base of this branch stood at Dh34.75 million. Bank Muscat will take up all these matters to its next board meeting.

It was recently that, Bank Muscat, as part of expanding in the region, finalised the acquisition of the Bahrain operations of ABN Amro Bank. Bank Muscat enjoys a market share of over 35 per cent in corporate banking in Oman.