Dodgy travel expenses are a common complaint of company finance departments, but most businessmen’s claims for minibar snacks and lavish lunches top out at hundreds of dollars, rather than millions.
But BankMuscat warned this week of a potential hit to profits of 15 million Omani rials (Dh143.1m) after 12 prepaid travel cards were “compromised”.
“No customers have suffered any financial loss and no other credit or debit cards issued by Bank Muscat have been affected,” the bank said. “The bank is working with all stakeholders to further investigate and to establish any losses arising from these transactions .”
Prepaid debit cards act like normal bank cards but are topped up with cash payments, rather than being linked to a savings account.
They are often used as gift cards or to simplify expense claims, doing away with the need for fiddly receipts.
The cause of the security incident, which occurred outside of Oman on Wednesday, is unclear.
But the potential impact represents more than 10 per cent of the bank’s latest full-year earnings of 139m rials.
The bank on Monday called an emergency meeting of its board to discuss the security incident.
“We are exploring all avenues to minimise the impact on our shareholders and will pursue the various options available to the bank,” it said.
The bank’s stock Monday plummeted 4.7 per cent after the security breach was announced. The bank’s shares recovered ground yesterday, but are 2.2 per cent off their value before the incident was revealed.
Last Wednesday, BankMuscat announced a private placement of its shares with the International Finance Corporation worth 75.1m Omani rials, equivalent to 5.2 per cent of the bank’s share capital.
Bank security issues have become common in the Middle East as the region’s wealth has grown, with lenders in the region overhauling technology to combat fraud and cybercrime that has become increasingly sophisticated.
The UAE’s Central Bank has started to implement chip and pin across the Emirates during the past few years, but not all banks were able to roll out the new security features on all prepaid cards, debit cards and ATMs by the December 31 deadline last year.