The National Bank of Oman (NBO) launched its new sharia-compliant brand, called Muzn, this week. This is the first foray into the world of Omani Islamic finance for the bank, which is the second-largest in the country by assets.
NBO is waiting for the necessary regulatory approvals from the Central Bank of Oman, and following those it will offer a selection of retail and corporate products from several Muzn bank branches.
Oman’s government ministries have been working towards establishing Islamic finance guidelines in order for companies to begin rolling out offerings. Legislation establishing takaful (insurance) and sukuk (bonds) should be official by the end of the third quarter.
NBO CEO Ahmed Al Musalmi said, “We will be ready to launch operations as soon as Islamic banking regulations are out. Islamic banking will intensify competition in the market. But there is opportunity for innovation and creativity that each bank has to exploit to compete in the market.”
He continued, “The guiding principle behind the Muzn branding is to create ethical value for all stakeholders through innovation, customer care, and superior standards of operation. We believe in faith, honesty and clarity at NBO and we promise that Muzn will adhere rigorously to Sharia principles and to the highest standards of professional conduct, corporate governance and ethics.”
Al Musalmi went on to say, “Initially, focus will mainly be on the liability side of retail banking and the financing side of corporate banking to build a balance sheet with a good mix. Initially we will start with murabaha and ijarah, which are basic products which the market can easily absorb. As we see the market evolving in terms of offerings we will launch other products as well.”
The name ‘muzn’ comes from the Arabic world for rain clouds, which are associated with favorable outcomes including growth, prosperity, fortune, and blessings.
The company is allocating OMR 15 million for its initial investment into the venture.
Islamic finance is a relatively new phenomenon in Oman, which held its first Islamic Banking and Finance Conference this June. The government is working on the necessary legislation to make offerings available to the public, but logistical problems and a small market might hinder its success in the sultanate, which, until last year, insisted on keeping its banking sector conventional.
Due to the sudden change, many banks are getting involved in Islamic finance in Oman at roughly the same time, increasing competition.