In this essay we will analyze the about Oman International Bank. First of all, we will discuss about the background of Oman International Bank and the relation with world economy. Also we will go to discussing about strengths and weaknesses about it. Finally, we will write recommendation that it can improve weaknesses.
HISTORY:
In 1979 Oman Arab African Bank was established as a Joint Stock Company. The Bank commenced its operations at a main office in Ruwi with a branch office at Muttrah. In 1980 the bank purchased a building in Ruwi and thus had its headquarters in the commercial center. In May 1980, the bank opened a branch at Sidab, a part of which was utilized as a special branch for ladies. In 1981 A new branches was opened at Al Khuwair. In 1982 the savings Prize Draw Scheme was launched with Prize money of R.O. 5,000/- per annum. Oman Arab African Bank the first all Omani Bank syndicating multi-currency facility of R.0. 7.25 million, acted as an agent and co-lead manager for Oman Refinery. In order to increase efficiency and service further, the bank aquired an IBM Computer System. This was the first step in computerizing the bank's service with modern technology. In 1983 a new branch was opened at Salalah offering a full range of banking services. The bank obtained a license to open an overseas branch in Mumbai. Oman International Bank came into existence on 1st January, 1984 and became the first 100% Omani owned commercial bank in the Sultanate of Oman. It is known as an innovative bank with a long list of firsts to its name, the first bank in the Gulf region to offer mobile banking service, the first Omani bank to issue a Visa Card, and the only bank in Oman currently offering unique Phone Banking service. It is an Oman-based bank that provides banking and financial services through a network of branches. The Bank offers its services primarily through four business units: Individual Banking, Corporate Banking, Institutional Banking and Treasury. Its Individual Banking unit offers deposit and card products, loans, remittances and investment services. Its Corporate Banking segment offers deposit products, syndicated loans, term loans, project financing and bill discounting through two subdivisions, namely Small & Medium and Corporate Business. The Institutional Banking segment offers products and services through two subdivisions: Institutional Banking, which includes vostro accounts, demand draft and telex transfers, and Foreign Trade, which offers letters of credit, bills for collection, merchant services and bank guarantees. Its Treasury unit offers foreign exchange, money market, interest rate market and structured solutions
STERNGTHS:
Branches:
Oman International Bank (OIB) has a branch network of 82 branches in the country and 4 overseas branches at Mumbai and Cochin in India and Karachi and Lahore in Pakistan. The vast network offers you a reach unmatched by any other bank in the Sultanate of Oman. So no matter where you are in the country, you are likely to find an OIB branch close to you.These branches offer a variety of services and facilities to make your life comfortable and easy. It is continuously striving to improve, update and expand its banking network with support of its loyal clientele. OIB's main aim is to make banking a memorable experience for its clients. We hope you will extend us your support in future, similarly as you have in the past. The bank study know how to increase the braches in other locations as it get more customers or find other projects to increase the total incomes and profit.
Retails:
From the very beginning, OIB has believed in providing its customers with the widest possible range of services. It has Retail Banking services include Savings Accounts as well as Current Accounts. Also, it offers a host of services specially designed for British, India and Pakistan expatriates. It pioneered the concept of banking for children in Oman by introducing savings accounts for school children. Today, almost 72,000 children bank with OIB. It has other retail services include MasterCard, Visa & American Express cards, granting loans for personal requirements and innovative services such as Mobile Banking, Phone Banking and many more.
Corporate banking:
OIB caters to Oman's booming business sector by offering its corporate clientele with tailor made services in the area of finance, trade business, treasury, merchant banking and electronic banking. It is the leader in financing trade, manufacturing and service activities offering creative solutions to the wide-ranging needs of its customers. It has worldwide network of more than 500 correspondent banks enables it to provide its corporate customers with excellent remittances, letters of credit and letters of guarantee services. Also, it has Trade Desk that puts local and international buyers / sellers in touch with each other to encourage international trade. OIB's dealing room has streamlined the Oman Foreign Exchange Market. Equipped with the latest technology, it offers sophisticated services that range from spot and forward purchases of foreign currencies to currency options and interest rate swaps. Clients are constantly advised of the movements of foreign exchange markets by an expert team of dealers. Hotline, the cash management service from OIB team enables clients to monitor their account operations on their own personal computers, on-line and in real time. OIB's payroll service, Paymaster processes the salaries of more than 30,000 private and public sector employees through payroll tapes or diskettes provided by the companies. OIB Trade Finance offers all sorts of related services and products through centralized Foreign Trade Department which is located at Ruwi, the Commercial hub of Oman. OIB has other corporate banking services include Share Issue Management, Fund Management and Financial Advisory Services.
Privilege banking
For the privileged few, banking is not about business or even cheque books and deposits. It is about a relationship. A relationship we at Oman International Bank call Privilege Banking As a Privilege Banking customer you get the very best personalized attention from our Relationship Manager who is specially assigned to take care of all your financial needs.And that's just the beginning of the numerous privileges that await you. To know more, just call us. It will be a start of a new and rewarding relationship
OIB Accounts:
1- Basma:
Basma is an easy, flexible and practical loan scheme for cars, furnishing and household goods, marriages or a well deserved holiday. And, for a nominal premium, you will also be insured for the loan period. Basma really gives you something to smile about. The borrowing with Basma is depends upon your circumstances and repayment capacity and is normally about two year's salary. You repay your Basma loan in easy monthly installments up to 72 months. You can apply for a Basma loan
absolutely no problems. Just fill in the application form from your branch, attach your salary assignment letter, your Identification card/passport copies and give it to the Customer Service Representative. If your application meets the bank's requirements, your loan will be credited to your account as soon as possible.
2-Almubde:
To Start Your Own Small Business, Al Mubde provides to existing as well as future entrepreneurs much more than financial assistance. It identifies opportunities, provides business and financial management know-how AND if required, technical training too. In short, Al Mubde is a complete base for an exciting, new future. You can avail of Al Mubde Simply contact the manager at the nearest OIB branch. He will provide you the complete details, along with the application forms.
3- ALmustaneer:
It is Education Loan for young Omani. Now the question of money need never arise if you want to get an education. Every young Omani will be able to study and realize his or her dreams and be the best they can be. Al Mostaneer from OIB is an easy to get and easy to repay loan for Undergraduate Studies.
4-Masroor:
Saving with your trusted friend can be so rewarding. Saving can be fun, and easy with Masroor. We'll show you how: - 1- Start an account with as little as RO. 5/- and above.2- Receive a gift on opening an account.3- Get the satisfaction of watching your money grow through regular deposits (weekly/monthly/your choice) and interst on savings.4-Have your own PASS BOOK and ABC PLUS CARD - VISA ELECTRON (for over 13 year olds). 5-Be remembered on your birthday (part of the fun).
5- Mandoos:
It is savings account that considered the biggest and most famous saving program in the Sultanate of Oman. You may with draw your saving at any time by using the withdrawal coupon form any OIB branch, or by using OIB plus card from any ATM location distributed all over the Sultanate. Accounting holder shall be eligible to participate in Mandoos prize draws, provided the realization of the minimum balance fixed by the bank. Each accounting holder shall obtain an ATM card free.
WEAKNESSES
All banking activities involve taking a certain level of weaknesses. The Bank is continually endeavoring to identify, manage and minimize weaknesses. The credit manual of the Bank lays down the policies and procedures and the review process for identifying non-performing advances and the provisioning procedures. The Risk Management Department reviews all credit proposals which are beyond the branch managers' approval powers. The Risk Committee sanctions credit proposals which are above Risk Management's delegated limits and the Board Credit Committee and Board of Directors approve proposals which exceed the pre-set limits of the Risk Committee.
The custody of all security related documents is centralized within Risk Management which also keeps a close watch on the utilization of the limits and takes necessary corrective steps to prevent accounts exceeding the approved limits. There is also a continuous review of the overdue loans and non-performing accounts. These are actively followed up before any decision on provisioning is made by the management. In addition, examination by the professionally organized internal audit team enables an independent assessment of the provision requirements to ensure that an adequate provision is carried in the Bank's accounts .The Central Bank of Oman examiners and the external auditors carry out an independent yearly review of the loan portfolio and also assess the provision requirements of the Bank.
1- Credit risk
Credit risk is the risk that counter-party to a transaction will fail to perform according to the terms and conditions of the contract thus causing the Bank to suffer a loss in terms of cash flow or market value. The Bank centrally carries out credit assessments and follows established policies and procedures set out in the credit manual. Exposure to individual customers, including related parties, is restricted to a percentage of the Bank's net worth as per the Banking Law of the Sultanate of Oman and the regulatory bodies of the foreign countries in which branches of the Bank operate The Bank generally deals with creditworthy parties to lessen its risk on each individual credit exposure by adhering to the laid down policies and procedures. On the money market and treasury-related activities, limits have been set for financial institutions and customers. These are regularly monitored to prevent undue exposure to a single customer/institution/country.
2- Market and currency risk:
Market risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices. The Bank has an active dealing room, which is manned by experienced staff. The treasury manual of the Bank sets out the details of the intra day and overnight exposures, which are strictly adhered to. In addition, the Central Bank of Oman restricts the net foreign currency exposure to a maximum of 40% of the net worth of the Bank. The foreign currency positions of local and overseas operations are monitored continuously by Head Office.
3-Liquidity risk:
Liquidity risk is the risk that an enterprise will encounter in raising funds to meet its obligations at any given time. The Bank's liquidity management policies are designed to ensure that even under adverse conditions the Bank should be in a position to meet its obligations. The Asset Liability Committee (ALCO) of the Bank, which comprises members of senior management, meets monthly to monitor liquidity requirements, lending ratio, interest (gap) limits, foreign currency exposure and other relevant measures. The ALCO also develops the information base and analytical tools to support the management of assets and liabilities besides developing policies and procedures on a continuing basis.
4- Interest rate risk:
Interest rate risk is the sensitivity of the Bank's financial condition to movements in interest rates. Mismatches or gaps in the amount of assets, liabilities and off-balance sheet instruments can generate interest rate risk, the impact of which is a function of the interest rate changes and the maturity profile of the assets and liabilities. The Bank's foreign currency loans are periodically reprised on a Libor basis, thus eliminating interest rate risk. Out of the total facilities, 53% are subject to re-pricing within a year. The remaining Real Omani facilities maturing above one year and up to five years are hedged predominantly by savings deposits, which are stable and have a low sensitivity to instant rate changes.
RECOMMENDATIONS
We think the possible recommendations to improve the risks that bank can face its. The bank should increase interest rate of loan and that same time decrease the years of payment. To decrease the market and currency risks should to a maximum of 40% of the net worth of the Bank. The foreign currency positions of local and overseas operations are monitored continuously by Head Office. The Bank should continue pursues its efforts to raise low cost deposits, which are stable in nature. The Bank should have gain the confidence of the international community and adequate funded and non-funded limits to enable it to raise resources to manage the short to medium term requirements. In order to minimize interest rate risk, the Bank generally adopts the following: Interbank placements and borrowings have a tenor of less than six months. Also, the Bank uses interest rate contracts and forward rate agreements to hedge interest risk.
CONCLUSION:
In conclusion, every organization must have strength and weakness, and services language is only who talk in the world of business, so no place for feeling and who will be strong and satisfy the needs and demand of customer who will be success in market. I think OIB is not popular enough in Oman because there are many other banks and OIB focus in some thing, but not cover all types of customer , for these reasons, it is not most popular bank in Oman.
