The Financial Implications Of Bank Muscat Essay

The Financial Implications Of Bank Muscat Essay

WRITE THIS ESSAY FOR ME

Tell us about your assignment and we will find the best writer for your paper.

Get Help Now!

The banks financial objective, like any other private sector firm, is to optimize the level of shareholder wealth, defined as the discounted stream of net cash benefits earned by the bank and available for ultimate distribution to the bank’s common shareholders. This translates into practice by bank financial managers striving to:
Stabilise and selectively increase their bank’s net income after taxes.
Achieve both a competitive rate of return on the assets they manage (a competitive ROA) and a competitive rate of return on the equity portion of the securities they issue (a competitive ROE).
In order to achieve their profitability targets (often stated in terms of ROA and ROE) banks and other financial services industry firms have to compete effectively by developing and marketing an attractive portfolio of financial products and services.
Introduction to Dissertation
I have chosen Bank Muscat because once it was a market leader in the banking industry in Oman, but now due to rising competition, the bank is facing threat from its competitors.
Banks face two broad financial questions: How should it pay for investments/deposits? And what investments should the bank make? The first question involves raising money and the second question involves raising it. The secret of success in financial management is to increase the overall value.
The transformation of the world economy has dramatic implications for business. American management, for example, is learning that the United States can no longer be viewed as a huge economy that does a bit of business with secondary economies around the world. Rather, the United States is merely one economy, albeit a very large one, that is part of an extremely competitive, integrated world economic system.
Financial statements gives the position of assets and liabilities of a company and a bank. Income statement is also a major constituent of the financial statement of a bank.
Bank Muscat

With assets worth over USD 15 billion, Bank Muscat (SAOG) is the leading financial services provider in Oman with a strong presence in Corporate Banking, Retail Banking, Investment Banking, Treasury, Private Banking and Asset Management. Firmly positioned to attract one million satisfied customers by 2010, the Bank has the largest network of 121 branches, 341 ATMs, 100 CDMs and 3500 PoS terminals in Oman, a branch in Riyadh, Saudi Arabia, and a representative office in Dubai (UAE).
Bank Muscat owns 49% of BMI Bank B.S.C ©, an independent bank in the Kingdom of Bahrain that is focused on becoming a truly GCC bank. The Bank also has a 43% stake in the Mangal Keshav Group, one of the oldest and most respected securities houses in the fast-growing Indian equities market, besides a 35% stake in Silkbank Ltd. (formerly Saudi Pak Commercial Bank) in Pakistan.
Bank Muscat holds the rare distinction of being voted the ‘Best Bank in Oman’ for seven years by The Banker, FT London; nine and eight years in a row by Global Finance and Euromoney respectively. Bank Muscat recently won the prestigious Hewitt recognition as the Middle East’s Best Employer 2009. The prominent accolades won by the Bank include the ‘Quality Recognition Award’ from JPMorgan Chase Bank and the ‘Best Place to Work in Oman’ awards in surveys conducted by leading international and regional business magazines. The Bank was declared an Investor in People (IiP) organisation in January 2007, becoming the first banking organisation in the MENA region to be awarded the prestigious global recognition. In 2004, Bank Muscat became the first bank in the Middle East to be completely ISO 9000:2000 certified.

Corporate Banking Division

Bank Muscat is the leading provider of corporate banking services in Oman, catering to domestic and overseas needs of small business, medium and large corporates, offering a wide range of products ranging from traditional working capital finance to project finance. The Bank’s clients include domestic and multinational companies engaged in activities across all sectors of the economy such as contracting, telecommunication, oil and gas.

Consumer Banking Division

Bank Muscat believes in investing in state-of-the-art technology to provide a complete range of value-added personal banking products and services to customers. The Bank currently offers a comprehensive suite of world class e-banking channels, including Online Banking, 24 x 7 Call Centre, and the largest network of ATMs and CDMs in the Sultanate.

Investment Banking Division

Bank Muscat plays a key role in the development of Investment Banking and Treasury in Oman. The Investment Banking division provides a comprehensive suite of financial services – corporate finance, product structuring, brokerage and research and a host of treasury products. The Bank has an unmatched record of being the first to launch a debt product, an index tracker, a guaranteed product, a private equity fund, subordinated loan, convertible bond and an international product listed on the local market.

Asset Management Division

The Asset Management division is a leading player across the region and manages investment portfolios for several premier institutional clients in Oman. In the mutual fund industry in Oman, Bank Muscat occupies a dominant position. The division offers portfolio management, custodial and accounting services and is also involved in structuring, marketing and managing new funds in various asset classes.

Private Banking Division

The Private Banking division has a distinguished track record in banking and wealth management. Whether it is maximising investment portfolio or assisting in structuring finances, the Private Banking division continues to meet and exceed the expectations of clients.

Brief Literature Review

Reference: Business Essentials: Managing Financial Resources and Decisions, BPP Learning Media, London, ISBN 9780751744743
Banks:
There are different types of banks which operate within the banking system, and we will probably have come across a number of terms which describe them.
Clearing Banks: Clearing banks are the banks which operate the so-called ‘clearing system’ for settling payments (e.g. payments by cheque by bank customers).
Retail Banks: The term retail banks is used to describe the traditional High Street banks, Barclays, NatWest, etc. The term ‘wholesale’ banks refer to banks which specialize in lending in large quantities to major customers. The clearing banks are involved in both retail and wholesale banking but are commonly regarded as the main ‘retail’ banks.
Merchant banks are banks which offer services, often of a specialised nature, to corporate customers – companies.
All but the smallest businesses make extensive use of banks. The main functions and activities of banks can be summarised as follows.
Providing a payments mechanism i.e., a way in which individuals, firms and government can make payments to each other. The ‘clearing system’ of the clearing banks is the major payments mechanism in the UK, and it enables individuals and firms to make payments by cheque. The banks are also a source from which individuals and firms can obtain notes and coins.
Providing a place for individuals, firms and government to store their wealth, for example, in current accounts or deposit accounts. Banks compete with other financial institutions to attract the funds of individuals and firms.
Lending money in the form of loans or overdrafts.
Acting as ‘financial intermediaries’: they accept deposits from people who have surplus wealth and lend it to those that need to borrow.
Providing customers with a means of obtaining foreign currency, or selling foreign currency, whenever they require it.
Borrowing Money:
If you want to borrow money the people lending it to you will usually only be prepared to do so if they are sure of the following:
They will be repaid within a reasonable time.
They will make more for themselves by lending it to you (and making you pay interest) than they would from doing something else with their money.
Banks do not lend their money to anybody who happens to walk through the door. They apply certain well-tested principles of lending:
They look at the character of the person or business asking for the loan. Can they be trusted – for example have they borrowed and repaid money in the past?
Is the borrower able to repay? If it is a business, is it a profitable one and are there enough spare profits to be able to afford the interest and the periodic repayments of portions of the loan?
Will the bank make money out of the loan? If the bank itself has to pay out 3% interest to people who deposit money in their accounts then it will have to charge more than 3% interest to people who borrow money.
The bank will want to know the purpose of the loan. They wont lend you money so that you can engage in drug-dealing, for example. If you intend to gamble the money you want to borrow on the 3.30 pm at Cheltenham the bank will not take the risk.
The amount of the loan is partly dependent on whether the borrower can afford to repay capital and interest and what security there is available. For many business loans, however, the bank prefers the customers to have a significant personal stake in whatever the loan is for – the bank will put up ₤10,000 to help buy a new machine, say, if the business puts up the remaining ₤10,000 needed.
The repayment terms of the loan are very significant. These do not just include how long the loan will continue (say, for three or five years) and how much of each regular payment is of capital, and how much of interest, but also the circumstances in which the bank can call in the loan early. For instance, the terms may state that the entire loan should become repayable, with penalty interest, if more than two consecutive payments are late.
The bank will need some form of security which it can turn to if the loan is not repaid. This is just like a mortgage: if you can’t afford your mortgage repayments your house (the security) will be repossessed. Likewise, a bank will take some sort of charge over a business’s assets. This means that the bank has a legal right to seize the assets if the loan is not repaid.

Our group of highly qualified and skilled writers is ready to help you with a similar paper within a specified deadline. Just click the “ORDER NOW” button and provide us with your assignment details