Bank Muscat plans Indian joint venture

Bank Muscat, Oman's largest bank in terms of assets, is holding talks with Indian private banks, to convert its Indian operations into a joint venture bank in India. According to highly placed sources, the banks with which Bank Muscat currently holds talks include big names like UTI Bank and IDBI Bank.

Bank Muscat already has a branch in Bangalore which was set up in the last quarter of 1998. The Bangalore operations of the bank could break-even in its second year of operation itself, when it recorded a Rs20 million net profit for the year 2000-2001.

Should Bank Muscat's Bangalore branch becomes a joint venture bank, Bank Muscat will propose to hold 40 per cent stake in the new venture with the 60 per cent being offered to the Indian partner. This will also allow the new joint venture entity to expand in India by adding branches to its network.

Moreover, an opportunity to tag a name like UTI Bank or IDBI Bank will certainly offer the much-needed mileage to the bank, which will in turn enable it to stage a better performance in the Indian market. Earlier, Bank Muscat had plans to set up another branch, Mumbai being the favoured location.

Another Omani Bank, Oman International Bank (OIB) with branches in Kochi and Mumbai, has not been doing well with the Mumbai branch adding to the woes of the Indian operations of OIB. However, OIB management is pursuing tough measures to bring its Indian operations on track.

Bank Muscat recently finalised a deal to acquire the Bahrain branch of ABN Amro following a due diligence carried out by Ernst & Young. The deal for this is almost through and once the regulatory nods are in place from both Oman and Bahrain, the acquisition will be complete.

The bank is said to be on the look out for branches of another bank also in Bahrain. "Our prime motive is to increase deposit base by establishing presence in other Gulf countries like Bahrain and the UAE," a top Bank Muscat official said.

It is keen about raising deposits in dollar and Saudi riyals outside Oman, and establishing itself as a regional bank.

Through the acquisition of the Bahrain branch of ABN Amro, Bank Muscat will get two licences - commercial banking and offshore operations, since this branch possesses both. Bank Muscat will have the option to increase the number of branches once the acquisition is through.

Bank Muscat has always been keen to enter the UAE and had already made a formal application to the UAE Central Bank some time back. In UAE, the bank is currently operating through its representative branch in Dubai, which it hopes to upgrade into a full-fledged bank if the authorities favour such a move.

Last year, Bank Muscat bought Commercial Bank of Oman (ComBank) to become the largest bank in the country.