Suhail Bahwan buys NBO stake

The shareholding pattern of the National Bank of Oman (NBO) has undergone a change with the Suhail Bahwan Group taking a 34.56 per cent equity stake.

New capital injection of 53.229 million Omani riyals (Dh508.48 million) through a private placement will spur the growth of NBO, the bank said yesterday.

NBO's shareholders approved the equity private placement at an extraordinary general body meeting held in Muscat.

Under the terms of the transaction which has secured all regulatory approvals, 24,195,406 shares at a price of 2.200 riyals per share (amounting to 53.229 million riyals) will be placed with Suhail Bahwan Group (Holding) LLC, a leading industrial group in Oman.

With this the bank's authorised and issued share capital will increase from 50 million riyals to 80 million riyals and 45.805 million riyals to 70 million riyals respectively.

The Suhail Bahwan Group will control 34.56 per cent of the new equity structure. The Suhail Bahwan Group is a major domestic and regional enterprise with a turnover of $400 million.

It has more than 30 companies and business interests cover power, construction, telecoms, consumer durables, IT, healthcare, travel and tourism, shipping and others. In recent months, NBO has undertaken an in-depth review of the total loan portfolio across the three countries in which it operates.

The bank's board has commissioned an independent in-depth assessment of the entire loan portfolio.

The findings of both the internal and external reviews indicate that classified advances are projected to increase from 211 million riyals as of September 30 this year to 271 million riyals by the end of the year, creating a need for an increase in related provisions of 50 million riyals.

"It is encouraging that after the completion of the ongoing exercise, the level of provision coverage will reach 71 per cent, which when augmented by the security held as collateral aggregates coverage of over 90 per cent of the total non-performing loans," said a bank statement.

"The combination of the necessary but painful measures to be taken in 2003 will leave the bank well placed to generate sustained levels of operating profitability from the first quarter 2004," added the statement.

The injection of new capital will position NBO to emerge as the largest bank in Oman with a paid-up capital of 70 million riyals. At the end of September the bank's deposits stood at 561.7 million riyals.