Oman International Bank is looking to grab a slice of the US$1 trillion Islamic finance market.
That was the reading from analysts yesterday after the bank announced it was considering a "strategic alliance" with another financial institution.
"This strategic review will evaluate potential operating models for the future and will consider whether the bank should remain independent, whether it should form a strategic alliance with another leading financial institution or whether it should pursue other different forms of cooperation," the lender said in a filing to the Muscat Securities Market.
The statement follows a decree in May from Oman's ruler, Sultan Qaboos bin Said, paving the way for the country's first standalone Islamic bank, Nizwa Bank. The decree also opened the door for conventional banks to add Islamic products to their offerings.
The announcement yesterday was seen as a step in that direction. "It is a positive move. The bank is clearly looking to find opportunities that will take them to the next phase of growth," said Kanaga Sundar, the head of research at Gulf Baader Capital Markets in Muscat. "They may look at strong regional players who have expertise in Sharia-compliant offerings and other businesses."
The stock closed almost 2 per cent higher at 0.264 rials on the Omani bourse. Oman's benchmark index was down 0.2 per cent at 5,926.43 points in a broadly negative session for Gulf markets.
"Conventional lenders should benefit from operating Islamic windows as it will provide a means to diversify revenue and [assist] potential volume growth," Mr Sundar said.
The news came as the country was hosting its first Islamic banking conference. Representatives of regional Islamic financial institutions and Omani banks met in Muscat to map out a strategy for the country to become a part of the Islamic finance industry.
The sector is valued at about $1tn globally, says PricewaterhouseCoopers, which also forecast the growth of Islamic finance at 15 to 20 per cent a year.
Oman's biggest lender, Bank Muscat, already offers Islamic banking through its associate Bank Muscat International in Bahrain. National Bank of Oman is likely to turn to its majority shareholder, Commercial Bank of Qatar, for expertise in Islamic banking.