Through the global financial crisis, Omani banks have proved remarkably resilient, due to adequate provisioning and low exposure to the toxic assets that caused such turmoil elsewhere. The banking sector has a largely domestic and regional focus, sparing most institutions from the effects of collapses in North America and Europe. The cautious policy of the Central Bank of Oman regarding asset/liability management and funding, as well as its quick fire-fighting work as the effects economic crisis began to be felt, has helped shore up the system. The banking sector's transparency has long been seen as one of the its strong suits, and Omani banks have set a regional example in their clarity about exposure to bad assets, David Murray Sims, CEO of The National Bank of Oman (NBO), told OBG.
Oman is not unscathed; some key projects, most notably in hydrocarbon extraction, were put on hold as liquidity dried up. The Duqm Refinery and Petrochemicals Complex, for example, has been frozen, though recent reports suggest that it may be restarted in the near future. Banks have also become somewhat more cautious.
"The global economic downturn has led a lot of institutions to review what they are doing," Sims said. "Institutions are indeed more careful about how they are lending and this is a worldwide phenomenon. Banks are going back to the basics where they do the proper due diligence before lending."
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