Bank Muscat agrees Dubai stake sale

Shareholders of Bank Muscat, Oman's biggest lender by market value, on Saturday voted in favour of selling a 15% stake to Dubai Financial through a $619 million private placement.

Bank Muscat will issue 161.57 million new shares at 1.475 rials ($3.83) per share through a private share sale with the Dubai firm, whose parent Dubai Holding is owned by the emirate's ruler Sheikh Mohammed bin Rashid al-Maktoum.

The transaction will make Dubai Financial Bank Muscat's second-biggest shareholder.

"The private placement will take the bank's paid up capital to 107 million rials ... the funds will help us further strengthen our capital adequacy position," Bank Muscat Chairman AbdulMalik al-Khalili told reporters.

The Dubai Financial deal would increase Bank Muscat's capital adequacy ratio, the ratio of the bank's capital to its risk-weighted credit exposure, to 18.87 percent from 11.4 percent now, he said.

Bank Muscat plans to use the funds to expand its operations, including new branches in Qatar, Kuwait and the United Arab Emirates, Khalili said.

Across the Gulf, banks, buoyed by the economic windfall of a tripling of oil prices since 2002, are expanding and making acquisitions as competition intensifies at home.

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