EVERYONE WINS

Oman 2014 | FINANCE | INTERVIEW

TBY talks to Abdul Kader Askalan, CEO of Oman Arab Bank (OAB), on the development of the bank, the SME segment, and e-banking opportunities.

Abdul Kader Askalan
BIOGRAPHY
Abdul Kader Ahmed Askalan began his career in 1957 with Arab Bank, going on to occupy many senior positions at the firm. He worked as Branch Manager in Ras Al-Khaimah and later in Muscat. In 1984 Omnivest and Arab Bank joined to create Oman Arab Bank and he acted as General Manager and Managing Director until 2000, when he became CEO. Askalan participates as a Board Member for a number of companies, including Omnivest and Gulf Investment Corporation of Kuwait, as well as being the Deputy Chairman of Omantel and Chairman of the Oman Association of Banks.

How has Oman Arab Bank (OAB) developed in recent years?

OAB has grown steadily over the years and we now have 62 branches with over 1,000 employees. Due to our prudent approach we have always generated profits for our shareholders. OAB began operations with $6 million in capital and now has $116 million. We have focused on corporate banking and financing industrial projects. We have been involved in financing for roads, hospitals, and schools, as well as many infrastructure projects, and we finance directly through contractors. Most of the roads in Oman today were financed by OAB. We do not finance the government, but always the contractor. We have heavily invested in Sohar Port, where we are financing projects worth over $600 million in total. We are now opening a branch in the industrial zone. We also financed all the companies that are working in Duqm, and we were the first bank to open a branch there. OAB has given loans to the Duqm project totaling over $150 million.

What is your strategy for sourcing new project finance contracts?

We monitor all contracts being tendered constantly. We go to the Tender Board for the list of all projects and then we contact the potential contractors in order to bid to arrange financing facilities. This ensures that we will arrange the financing facilities, irrespective of which contractor wins the contract. This is imperative because we do not know who the winner will be, but we have to make the contract, even if they are foreign companies. We are very active and utilize Arab Bank branches in foreign countries to contact the headquarters of those companies looking to invest here.

What products and services do you offer SMEs?

We are one of the few banks nominated by the Ministry of Industry and Commerce to finance SMEs, with the government securing 50% and the banks taking 50% of the responsibility. We are very active in this field and finance many companies. We now also arrange seminars for small business owners to educate them about financing, managing their projects, and how to run a successful business. There is a need to participate, to educate the people on how to operate businesses, how to manage, how to prepare a balance sheet, and how to analyze their business financially. You have to prove to the bank that you are capable of managing your project, and these seminars will go a long way to help SMEs owners gain access to credit.

How important is e-banking for OAB?

We concentrate and spend a great deal of money on e-banking. We were the first bank to issue the Smart Card, which is an internal system—not linked to Visa or other major companies—and it was very successful. We started issuing them in 2000, and for the 13 years we have been using it there have been no errors. Nobody can force or misuse this card since it can only be used for the purpose for which it was issued. It is a pre-paid card, but it is very secure and very comfortable. We have collected billions of rials through this. Eventually, the government will have its own internal system using our technology. If anyone pays by Visa, the money takes three days for approval to be given from a different country. With the Smart Card, the money is transferred instantaneously because it is not waiting for approval.

What is your outlook for the banking sector in the medium term?

I think that because the government is financially comfortable here and extremely capable of spending money on projects, everyone is working. And since oil prices are good, we are making reserves; therefore, there is no problem. The challenge is if the government faces difficulty in financing the projects it announces. If you have a project and a contractor, a company, the bank, and the merchant are all working, then all the sectors are happy. However, if spending falls, everyone loses, including the bank. And, therefore, the banks are doing well so far, and, with political and economic stability, the future looks steady and promising.