private placement of 35,000,000 5.5% subordinated bonds ... · ‐oman.com prospectus private...
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www.ahlibank‐oman.com Prospectus
Private Placement of 35,000,000 5.5% Subordinated Bonds
Issue Price of RO 1.005 per Bond (comprising a face value of RO 1.000 and Baizas 5 towards Issue expenses)
Issue Opens: December 12, 2010
Issue Closes: December 15, 2010
Issue Manager:
The Financial Corporation Co. SAOG P.O. Box 782, P.C. 131, Sultanate of Oman Tel: 24816655; Fax: 24816611
Issuer:
Ahli Bank SAOG P. O. Box 545, P.C. 116, Sultanate of Oman Tel: 24577000; Fax: 24568001
Collecting Bank:
Ahli Bank SAOG P. O. Box 545, P.C. 116, Sultanate of Oman Tel: 24577000; Fax: 24568001
Issuer’s Credit Rating: Fitch: BBB+ ; Capital Intelligence: BBB+
Legal Advisor:
Said Al Shahry Law Office PO Box 1288, PC 112 Ruwi, Sultanate of Oman Tel: 24603123 Fax: 24603400
Ahli Bank SAOG
P. O. Box 545, P.C. 116 Sultanate of Oman
Tel: 24577000 Fax: 24568001
Private Placement of Rial Omani Thirty Five Million subordinated, non‐convertible & unsecured Bonds
at an Issue Price of RO 1.005 per Bond
(comprising a face value of RO 1.000 and Baizas 5 towards Issue expenses)
Issue opens on: December 12, 2010
Issue closes on: December 15, 2010
This is an unofficial English version of the original Prospectus prepared in Arabic and approved by the Capital Markets Authority pursuant to the Administrative Order No. xx/2010 dated December xx, 2010. In the event of any conflict between the Arabic version and the English version, the Arabic version will prevail. Although every effort has been made in preparing this translation, none of the Issuer, the Issue Manager and the Legal Advisor shall be held responsible for any information interpreted differently from the approved Arabic Prospectus. The Capital Market Authority (CMA) assumes no responsibility for the accuracy and adequacy of the statements and information contained in this Prospectus nor shall it have any liability for any damage or loss resulting from the reliance upon or use of any part of the same by any person.
Issue Manager:
The Financial Corporation Co. SAOG P.O. Box 782, P.C. 131 Sultanate of Oman Tel: 24816655; Fax: 24816611
Issuer:
Ahli Bank SAOG P. O. Box 545, P.C. 116 Sultanate of Oman Tel: 24577000; Fax: 24568001
Registrar & Trustee:
Muscat Clearing and Depository Company SAOC P.O Box 952, Ruwi, PC 112, Sultanate of Oman Tel: 24822222; Fax: 24817491
Legal Advisor:
Said Al Shahry Law Office PO Box 1288, PC 112 Ruwi, Sultanate of Oman Tel: 24603123 Fax: 24603400
Prospectus: Ahli Bank Bond Issue
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IMPORTANT NOTICE TO INVESTORS
The principal aim of this Prospectus is to present material information that may assist
investors to make an appropriate decision as to whether or not to invest in the securities
offered.
This Prospectus contains all material information and data and does not contain any
misleading information or omit any material information that would have positive or
negative impact on the decision of whether or not to invest in the offered securities.
The Board of Directors of Ahli Bank are jointly and severally responsible for the integrity
and adequacy of the information contained and confirm that to their knowledge due
diligence had been observed in the preparation of this Prospectus and further confirm that
no material information has been omitted, the omission of which would render this
Prospectus misleading.
All investors should examine and carefully review this Prospectus and make their own
independent investigation and examination of the financial conditions and affairs of the
Company in order to decide whether it would be appropriate to invest in the securities
offered by taking into consideration all the information contained in this Prospectus in its
context.
Notwithstanding the above, the potential investors are advised to seek independent advice
from their own investment and other professional advisors on the investment in the
offered securities and on the information contained in the Prospectus before deciding on
whether or not to invest in the securities offered.
It is noteworthy that no person has been authorized to make any statements or provide
information on the Issuer or the offered securities other than the persons whose names
are indicated herein and if any statement is made or information is provided, it should not
be relied upon by anyone.
The Capital Market Authority (CMA) assumes no responsibility for the accuracy and
adequacy of the statements and information contained in this Prospectus nor shall it have
any liability for any damage or loss resulting from the reliance upon or use of any part of
the same by any person.
Prospectus: Ahli Bank Bond Issue
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TABLE OF CONTENTS
SECTION PAGE No.
1. DEFINITIONS .................................................................................................................. 5
2. BOND ISSUE SUMMARY ................................................................................................ 7
3. CREDIT RATING ........................................................................................................... 11
4. RISK FACTORS AND MITIGANTS .................................................................................. 16
5. OBJECTIVES AND LICENSES ......................................................................................... 20
6. PURPOSE OF THE BOND ISSUE AND ISSUE EXPENSES ................................................ 23
7. TERMS AND CONDITIONS OF THE BOND ISSUE .......................................................... 24
8. RIGHTS AND RESPONSIBILITIES ................................................................................... 34
9. RELATED PARTY TRANSACTIONS ................................................................................ 37
10. HISTORICAL FINANCIAL PERFORMANCE ..................................................................... 40
11. PEER GROUP COMPARISON ........................................................................................ 47
12. CORPORATE SNAPSHOT, BUSINESS PLAN AND FUTURE STRATEGY ........................... 49
13. CORPORATE GOVERNANCE, BOARD OF DIRECTORS AND MANAGEMENT TEAM ..... 53
14. SUBSCRIPTION CONDITIONS AND PROCEDURES ........................................................ 62
15. UNDERTAKINGS .......................................................................................................... 69
Prospectus: Ahli Bank Bond Issue
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SECTION 1
DEFINITIONS
Agency Agreement The agreement between the Issuer and MCDC for MCDC to
act as the Trustee
Ahli Bank / Bank / Issuer/Company Ahli Bank SAOG, Sultanate of Oman
Allotment Date The date on which the Bank allots Bonds to the applicants
who have submitted valid Applications which have been
accepted by the Issue Manager. The Allotment Date for the
proposed Bond Issue of the Bank is deemed to be the next
day of closing of subscription
Articles Articles of Association of the Issuer, as may be amended from
time to time in accordance with the provisions as contained
therein
Board / Board of Directors Issuer’s Board of Directors elected in accordance with the
Articles
Bonds 35,000,000 Bonds with a face value of RO 1.000 (Rial Omani
One) and issued at a price of RO 1.005 (Rial Omani One and
Baizas Five) per Bond aggregating to RO 35,175,000 (Rial
Omani Thirty Five Million and One Hundred and Seventy Five
Thousand) to be issued hereunder
Bondholder A holder of a Bond issued by the Issuer pursuant to this Issue
Bondholders’ Resolution A resolution passed at a meeting of Bondholders duly
convened and held in accordance with the provisions of the
Trust Deed and in accordance with the applicable provisions
of the CCL
Business Day A day on which banks and the Registrar are open for business
in Oman
CBO Central Bank of Oman
CCL Commercial Companies Law of Oman as contained in Royal
Decree 4/74 and the amendments thereto
CMA Capital Market Authority of Oman
CMA Law Capital Market Law of Oman as contained in Royal Decree
80/98
Conditions The terms and conditions of the issue of Bonds as set out in
Section 7 of this Prospectus
Director Means a member of the Board of Directors
Event of Default Any of the events described in Condition 21 of Section 7 of
this Prospectus
Face Value RO 1.000 per Bond
Prospectus: Ahli Bank Bond Issue
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Financial Year The financial year of the Issuer commencing on 1st January
and ending on 31st December or as may be amended by the
Shareholders in accordance with the Issuer’s Articles of
Association
Interest Payment Record Dates
Interest semi‐annual, on 15th December & 15th June each
year starting from allotment date. The interest payments shall
be made to the Bondholders whose names appear on the
Register as of the relevant record date. Interest cheques (or
electronic payments) will be mailed by registered mail to
respective Bondholders within one week of the respective
Interest Payment Record Dates.
Issue Price RO 1.005 per Bond including Baizas 5 towards issue expenses
Laws of Oman The laws of Oman in the form of Royal Decrees, Ministerial
Decisions and CMA and CBO Regulations as the same may
have been, or may from time to time be enacted, amended or
re‐enacted or issued
MCDC/Registrar Muscat Clearing and Depository Company SAOC, P.O. Box
952, Ruwi, Postal Code 112, Oman
MOCI Ministry of Commerce and Industry of Oman
MSM Muscat Securities Market
Oman The Sultanate of Oman
Prospectus Means this Prospectus
Register The Register to be maintained by the Registrar in which
information relating to the Bonds and the Bondholders shall
be recorded
Regulations Means regulations issued pursuant to the Laws of Oman
Rial Omani or RO Omani Rial, which is the lawful currency of Oman
Section Section of this Prospectus
Shares Ordinary Shares of the Issuer of nominal value of 100 Baizas
(Baizas one hundred each)
Shareholders The shareholders of the Issuer
Trust Deed The trust deed being entered into between the Issuer and
MCDC for the purpose of this Bond issue
Trustee MCDC or any successor body thereto and includes all persons
who may be appointed trustee under the terms of the Trust
Deed to act for and on behalf of the Bondholders as their
representative
Prospectus: Ahli Bank Bond Issue
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SECTION 2
BOND ISSUE SUMMARY
The following constitutes the summary (the “Summary”) of the essential characteristics of, and risks
associated with, the Issuer and the Bonds. This Summary should be read as an introduction to this
Prospectus. It does not purport to be complete and is taken from, and is qualified in its entirety by,
the remainder of this Prospectus. Any decision by an investor to invest in the Bonds should be based
on consideration of this Prospectus as a whole.
Issuer: Ahli Bank SAOG
Commercial Registration No: 1558560
Registered Office Postal Address: P.O. Box 545, P.C: 116, Mina Al Fahal, Sultanate of Oman
Credit Rating Long term rating: ‐ Fitch: BBB+ (August 2010) ‐ Capital Intelligence: BBB+ (July 2010)
Instrument offered Unsecured Non‐Convertible Subordinated Bonds (Tier II Capital)
Tenor of the Bonds 7 years
Call option The issuer has an option to redeem the Bonds at the end of 5 years from the allotment date
Interest rate 5.5% per annum of the face value of the Bond
Interest payment record dates Interest semi‐annual, on 15th December & 15th June each year starting from allotment date
Number of Bonds 35,000,000 (Thirty Five Million) Bonds
Face Value of the Bond Rial 1.000 each
Issue Expense Rial 0.005 per Bond
Issue Price Rial 1.005 per Bond including Baizas 5 towards issue expenses payable in full on subscription
Minimum and Maximum Subscription Application must be for a minimum of 100,000 bonds and in multiples of 1000 thereafter. There is no maximum limit on subscription.
Prospectus: Ahli Bank Bond Issue
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Security The Bonds will constitute direct, unconditional, subordinated and unsecured obligations of the Issuer, ranking pari passu without any preference among themselves and equally with all other existing and future unsecured and subordinated obligations of the Issuer save for such obligations that may be preferred by provisions of law that are mandatory and of general application
Proposed Investors The table below shows the names of the proposed investors for subscription of this issue.
Allotment of Bonds The Bonds will be allotted on the next day of closing of subscription, as per table below. Validity of the allotment shall be subject to the approval of all relevant authorities.
If any of the investors withdraws or does not subscribe to the full amount, the Board of Directors shall allocate the unsubscribed Bonds to one or more of the other investors subject to their maximum bonds commitment.
In the event the Bond Issue is not subscribed in full by the proposed Investors the Board of Directors may accept subscription only to the extent it is subscribed and accordingly the Bond issue size will be reduced.
Use of Proceeds Proceeds of the issue will be utilised to ‐ Fund the overall financing requirements of the Bank
in line with its growth plan Reduce dependence on large institutional funds Bridge the maturity gap in the long term buckets
expected to arise because of projected funding to large infrastructure/ government/ quasi government projects
Increase single obligor limits of the Bank and thus enable it to participate in large project financing
To meet the Tier II capital requirements of the Bank, which shall be governed by the Central Bank of Oman’s rules and regulations
Listing The Bonds shall be listed and traded in the Muscat Securities Market
Trustee Muscat Clearing and Depository Company SAOC
Prospectus: Ahli Bank Bond Issue
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Issue Manager
The Financial Corporation Co. SAOG (FINCORP) P.O. Box 782, Al Hamriya. P.C. 131 Sultanate of Oman Email: [email protected] Tel: 24816655 Fax: 24816611
Auditor KPMGP.O. Box 641 Postal Code 112 Ruwi, Sultanate of Oman Tel: 24709181 Fax: 24700839
Legal Advisor Said Al Shahry Law OfficePO Box 1288, PC 112 Ruwi, Sultanate of Oman Email: [email protected] Tel: 24603123 Fax: 24603400
Collecting Bank Ahli Bank SAOG
Table showing names of proposed investors, number of bonds undertaking and proposed allotment of bonds:
Sl. Name of the Investor Undertaking amount Proposed Allotment
Million Bonds Million Bonds
1 Public Authority for Social Insurance (PASI) 6.000 3.850
2 MoD PF (10%) 3.500 2.250
3 Oman Fisheries 1.000 0.640
4 Vision Insurance 0.400 0.260
5 National Life & General Insurance 0.500 0.320
6 Dr. Abdulla Abbas 0.500 0.320
7 Rashid Al Rajhi 2.000 1.280
8 The Financial Corporation Co. SAOG (FINCORP) 3.000 1.930
9 Port Services Corporation 3.000 1.930
10 Oman Arab Bank SAOC 1.500 0.960
11 Abdul Kader Ahmed Askalan 0.300 0.200
12 Oman Qatar Insurance 0.400 0.260
13 Oman Investment Fund 5.000 3.210
14 Oman Re‐insurance 0.500 0.320
15 Ahli United Bank Money Market Fund 0.500 0.320
16 Oman LNG 0.575 0.370
17 Bank Muscat –Staff Saving 0.500 0.320
18 Civil Service Pension Fund 10.000 6.420
19 Engr. Mohsin Mohammed Al Sheikh 0.300 0.200
20 Diwan of Royal Court Pension Fund 3.000 1.930
21 Malallah Ali Mohammed Al Lawati 12.000 7.710
Total 54.475 35.000
Prospectus: Ahli Bank Bond Issue
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The issue of the Bonds was authorized by:
1. The CBO vide their letter No. BDD/CBS/AB/2010/6331 dated August 11, 2010 approving the
Issue; and
2. The Shareholders of the Issuer at an Extra‐ordinary General Meeting held on December 1, 2010
approving the Issue of Bonds.
Prospectus: Ahli Bank Bond Issue
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SECTION 3
CREDIT RATING
Credit Rating of the Issuer
Fitch Fitch Ratings is dual‐headquartered in New York and London, with 50 offices worldwide. Fitch
Ratings’ global expertise, built on a foundation of local market experience, spans capital markets in
over 150 countries. Fitch Ratings is widely recognized by investors, issuers, and bankers for its
credible, transparent and timely coverage. Fitch Ratings is a part of the Fitch Group, which is a
majority‐owned subsidiary of Fimalac, S.A., an international business support services group
headquartered in Paris, France.
Fitch’s Issuer Rating:
Long Term Short Term Financial Strength / Outlook
Fitch Rating BBB + F2 Stable
Fitch Ratings – Definitions
The following rating scale applies to Issuer ratings:
Long Term Ratings
Investment Grade
AAA Highest credit quality. ‘AAA’ ratings denote the lowest expectation of credit risk. They are assigned
only in case of exceptionally strong capacity for payment of financial commitments. This capacity is
highly unlikely to be adversely affected by foreseeable events.
AA Very high credit quality. ‘AA’ ratings denote expectations of very low credit risk. They indicate very
strong capacity for payment of financial commitments. This capacity is not significantly vulnerable
to foreseeable events.
A High credit quality. ‘A’ ratings denote expectations of low credit risk. The capacity for payment of
financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to
changes in circumstances or in economic conditions than is the case for higher ratings.
Prospectus: Ahli Bank Bond Issue
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BBB Good credit quality. ‘BBB’ ratings indicate that there are currently expectations of low credit risk.
The capacity for payment of financial commitments is considered adequate but adverse changes in
circumstances and economic conditions are more likely to impair this capacity. This is the lowest
investment grade category.
The modifiers “+” or “‐” may be appended to a rating to denote relative status within major rating
categories.
Speculative Grade BB Speculative. ‘BB’ ratings indicate that there is a possibility of credit risk developing, particularly as
the result of adverse economic change over time; however, business or financial alternatives may
be available to allow financial commitments to be met. Securities rated in this category are not
investment grade.
B Highly speculative. ‘B’ ratings indicate that significant credit risk is present, but a limited margin of
safety remains. Financial commitments are currently being met; however, capacity for continued
payment is contingent upon a sustained, favorable business and economic environment.
CCC, CC, C High default risk. Default is a real possibility. Capacity for meeting financial commitments is solely
reliant upon sustained, favorable business or economic conditions. A ‘CC’ rating indicates that
default of some kind appears probable. ‘C’ ratings signal imminent default.
D Indicates an entity or sovereign that has defaulted on all of its financial obligations. Default
generally is defined as one of the following:
Failure of an obligor to make timely payment of principal and/or interest under the contractual
terms of any financial obligation;
The bankruptcy filings, administration, receivership, liquidation or other winding‐up or
cessation of business of an obligor;
The distressed or other coercive exchange of an obligation, where creditors were offered
securities with diminished structural or economic terms compared with the existing obligation.
Issuers will be rated 'D' upon a default. Defaulted and distressed obligations typically are rated
along the continuum of 'C' to 'B' ratings categories, depending upon their recovery prospects and
other relevant characteristics.
Default is determined by reference to the terms of the obligations' documentation. Fitch will assign
default ratings where it has reasonably determined that payment has not been made on a material
Prospectus: Ahli Bank Bond Issue
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obligation in accordance with the requirements of the obligation's documentation, or where it
believes that default ratings consistent with Fitch's published definition of default are the most
appropriate ratings to assign.
Short Term Ratings
F1 Highest short‐term credit quality. Indicates the strongest intrinsic capacity for timely payment of financial commitments.
F2 Good short‐term credit quality. Good intrinsic capacity for timely payment of financial commitments.
F3 Fair short‐term credit quality. The intrinsic capacity for timely payment of financial commitments is adequate.
B Speculative short‐term credit quality. Minimal capacity for timely payment of financial commitments, plus heightened vulnerability to near term adverse changes in financial and economic conditions.
C High short‐term default risk. Default is a real possibility.
D Default. Indicates a broad‐based default event for an entity, or the default of all short‐term obligations.
Notes: The modifiers “+” or “‐” may be appended to a rating to denote relative status within major rating
categories. Gradation may be used among the ratings from A to E: i.e. A/B, B/C, C/D, and D/E.
Capital Intelligence (CI)
CI has been providing credit analysis and ratings since 1985, and now rates over 400 Banks,
Corporates and Financial Instruments (Bonds & Sukuk) in 39 countries. A specialist in emerging
markets, CI’s geographical coverage includes the Middle East, the wider Mediterranean region,
Central and Eastern Europe, South Asia, South‐East Asia, the Far East, and North and South Africa.
CI’s Issuer Rating:
L / Term S / Term Financial Strength / Outlook
CI Rating BBB+ A2 BBB /Stable
Prospectus: Ahli Bank Bond Issue
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CI Ratings – Definitions
Long Term Ratings
Investment Grade
AAA The highest credit quality. Exceptional capacity for timely fulfillment of financial obligations
and most unlikely to be affected by any foreseeable adversity. Extremely strong financial condition
and very positive non‐financial factors.
AA Very high credit quality. Very strong capacity for timely fulfillment of financial obligations.
Unlikely to have repayment problems over the long term and unquestioned over the short and
medium terms. Adverse changes in business, economic and financial conditions are unlikely to
affect the institution significantly.
A High credit quality. Strong capacity for timely fulfillment of financial obligations. Possesses many
favourable credit characteristics but may be slightly vulnerable to adverse changes in business,
economic and financial conditions.
BBB Good credit quality. Satisfactory capacity for timely fulfillment of financial obligations.
Acceptable credit characteristics but some vulnerability to adverse changes in business, economic
and financial conditions. Medium grade credit characteristics and the lowest investment grade
category.
"+" and "‐" signs indicate that the strength of a particular bank is, respectively, slightly greater or less than that of similarly rated peers.
Speculative Grade
BB Speculative credit quality. Capacity for timely fulfillment of financial obligations is vulnerable to
adverse changes in internal or external circumstances. Financial and/or non‐financial factors do not
provide significant safeguard and the possibility of investment risk may develop.
B Significant credit risk. Capacity for timely fulfillment of financial obligations is very vulnerable to adverse changes in internal or external circumstances. Financial and/or nonfinancial factors provide weak protection; high probability for investment risk exists.
C Substantial credit risk is apparent and the likelihood of default is high. Considerable uncertainty as to the timely repayment of financial obligations. Credit is of poor standing with financial and/or non‐financial factors providing little protection.
RS Regulatory supervision. The obligor is under the regulatory supervision of the authorities due to its weak financial condition. The likelihood of default is extremely high without continued external support.
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SD Selective default. The obligor has failed to service one or more financial obligations but CI believes that the default will be restricted in scope and that the obligor will continue honouring other financial commitments in a timely manner.
D The obligor has defaulted on all, or nearly all, of its financial obligations.
Short‐Term Ratings
Investment Grade
A1 Superior credit quality. Highest capacity for timely repayment of short‐term financial obligations that is extremely unlikely to be affected by unexpected adversities.
A2 Very strong capacity for timely repayment but may be affected slightly by unexpected adversities.
A3 Strong capacity for timely repayment that may be affected by unexpected adversities.
Speculative Grade
B Adequate capacity for timely repayment that could be seriously affected by unexpected adversities.
C Inadequate capacity for timely repayment if unexpected adversities are encountered in the short term.
RS Regulatory supervision. The obligor is under the regulatory supervision of the authorities due to its weak financial condition. The likelihood of default is extremely high without continued external support.
SD Selective default. The obligor has failed to service one or more financial obligations but CI believes that the default will be restricted in scope and that the obligor will continue honouring other financial commitments in a timely manner.
D The obligor has defaulted on all, or nearly all, of its financial obligations.
Notes: "+" and "‐" signs indicate that the strength of a particular bank is, respectively, slightly greater or less than that of similarly rated peers.
Prospectus: Ahli Bank Bond Issue
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SECTION 4
RISK FACTORS AND MITIGANTS
Investors may note that the risks and mitigating factors mentioned below are not exhaustive and
constitute Ahli Bank’s opinion based on its current knowledge and the information available with it.
The actual risks and the impact of such risks could be materially different from those mentioned
herein.
General Risks
a) Economic Risk
Risk:
The Bank’s performance is primarily dependent on the economic environment of Oman in
which it operates. Any sustained change in the economic environment could have an impact on
the Bank’s underlying performance.
Mitigants:
The Bank is run by experienced management which is supervised and guided by various
committees of the Board, each with defined authority and responsibility. The Bank adopts a
conservative credit policy and has strong operational and risk based internal controls.
b) Change in Regulations
Risk:
The Bank is under the supervision of CBO, CMA and MOCI in Oman. Any sustained change in the
prevailing regulatory climate could have an impact on the Bank’s underlying performance.
Mitigants:
In line with the previous policies of the Omani regulatory authorities, any changes in regulations
are expected to maintain a healthy banking sector and the Bank has a well‐experienced and
stable management and infrastructure to adapt to such changes.
Prospectus: Ahli Bank Bond Issue
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Specific Risks
a) Competition
Risk:
The Bank faces competition from other commercial and specialised banks in Oman. This could
result in increased pressure on business volumes as well as margins with a consequent impact
on profitability.
Mitigants:
The Bank takes proactive steps to meet the challenges of competition.
b) Credit Risk
Risk:
Credit risk is the risk that counter party to a financial instrument will fail to perform according to
the terms and conditions of the contract thus causing the Bank to incur a financial loss.
Mitigants:
The Bank has clear parameters and limits on assessment and mitigation of credit and
concentration risks. The bank has clearly laid out credit policies, which document, inter alia, the
assessment of the payment ability and past history of the borrower and lay down specific
standards for collaterals. The policies also lay down concentration limits on the basis of CBO
regulations. Concentration limits are monitored on various parameters, including geography
and industry. The credit approval and administration procedures are also clearly laid down and
the implementation of such procedures is ensured through adequate internal controls,
including Internal Audits. Periodic credit review processes are in place to ensure continuing
compliance with the policies.
The Bank strictly follows the CBO guidelines and instructions on classification of Non Performing
Loans and maintains adequate provisions in case of a loss. There is also a General Portfolio
provision which is created on the entire Loans portfolio on the basis of CBO guidelines. These
robust credit policies and provisioning policies put the Bank in a comfortable position to address
any Credit Risks.
Prospectus: Ahli Bank Bond Issue
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c) Liquidity Risk
Risk:
Liquidity risk is the risk that the Bank will encounter difficulty in its maturing obligations to a
counterparty.
Mitigants:
The Bank’s policies are designed to ensure that even under severely adverse conditions, the
Bank will be in a position to meet its obligations. The Bank’s Asset Liability Committee (ALCO)
meets periodically to review and monitor various relevant measures against target positions.
The Bank also maintains significant investments in liquid instruments issued by Governments
and banks principally for liquidity reasons. The Bank also has standby lines of credit to meet its
obligations at any given time, if the need arises.
d) Interest rate risk
Risk:
Interest rate risk arises from the possibility that changes in interest rates will affect the value of
underlying financial instruments. The Bank is exposed to interest rate risk as a result of
mismatches or gaps in the amounts of assets and liabilities and off statement of financial
position instruments that mature or re‐price in a given period.
Mitigants:
The Bank’s overall goal is to manage interest rate sensitivity so that movements in interest rates
do not adversely affect the Bank’s net interest income. Interest rate risk is measured as the
potential volatility in net interest income caused by changes in market interest rates. The Bank
manages this risk by matching or hedging the re‐pricing profile of assets and liabilities through
various risk management strategies.
e) Foreign Exchange Risk
Risk:
Foreign exchange risk is the risk that the foreign currency positions taken by the Bank may be
adversely affected due to volatility in foreign exchange rates.
Prospectus: Ahli Bank Bond Issue
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Mitigants:
The responsibility for management of foreign exchange risk rests with the treasury department
of the Bank. Foreign exchange risk management is ensured through regular measurement and
monitoring of open foreign exchange positions. Treasury takes every possible measure to cover
open positions created by customer transactions.
Instruments used to mitigate this risk are foreign exchange spot, forwards, deposits, etc. These
instruments help to insulate the Bank against losses that may arise due to significant
movements in foreign exchange rates. All foreign exchange exposures are centrally managed by
the Bank’s Treasury and are daily marked to market. Limits have been assigned with respect to
overnight open exposures, stop loss and authorised currencies to monitor and control foreign
exchange exposures.
f) Redemption Risk:
While the Bonds have a maturity of seven years from the Allotment Date, the Bank will have a
call option to redeem the Bonds at the end of five years and hence the investors will face the
risk of early redemption.
Prospectus: Ahli Bank Bond Issue
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SECTION 5
OBJECTIVES AND LICENSES
Overview
The Bank was set up in May 1997 as Alliance Housing Bank (AHB), Oman’s first private sector
housing bank. It was reconstituted with its new identity as Ahli Bank SAOG on January 5, 2008,
following its strategic partnership with Ahli United Bank (AUB), a leading regional commercial bank
and International Finance Corporation (IFC), a member of the World Bank Group.
The Bank is fully transformed into and licensed by the CBO as a commercial bank and currently
provides a wide range of products and services in corporate, retail, investment and private banking
through its Head Office and 12 Branches.
Bank Objectives
As per Article 4 of the Articles of Association of the Bank, the main objectives of the Bank are as
under:
1) To carry on the business of banking in all its fields, and to transact and to do all matters and things incidental thereto, or which may, at any time hereafter at any place, where the Bank shall carry on business, be usual in connection with the business of banking or dealing in money or securities for money.
2) To play the role of underwriter, originator or intermediary for the issue of shares and loan debentures, to play the role of custodian, manager and trustee of trust agreements related to investment and bonds and to participate in any other manner in capital and stock markets, especially in investment, trading, underwriting new issues of bonds in regional and international capital markets with main emphasis on capital debt markets.
3) To carry on business of conventional financing.
4) To act as executors and trustees of wills, settlements and trust deeds of all kinds made by customers and others and to undertake and execute trusts of all kinds.
5) To deal with all types of bank notes, coins, currencies, receive and to deposit any monies in current accounts, term deposits, savings accounts and receive precious articles and financial documents for deposit in safe custody.
6) To issue and negotiate bank guarantees and letters of credit, cheque payments, money orders and all other negotiable documents and their collection.
7) To advance and lend money on real, personal and mixed securities, on cash, credit or other accounts, on policies, bonds, debentures, bills of exchanges, promissory notes, letters of credit or other obligations, or on the deposit of title deeds, merchandise, bills of sale and landing, delivery orders, warehousemen’s and certificates, notes, dock warrants, or other mercantile or tokens, bullion, stocks and shares.
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8) To settle negotiable cheques and to borrow funds and repay debts from any resources and with any other parties and using any financial instruments including but not limited to deposit certificates, loan debentures, loan bonds convertible into shares and bonds whether of medium term, limited term or floating term bonds with or without security.
9) To establish and distribute banking investment products
10) To sell and buy gold bullion and foreign currencies, to lend against them and to carry on all banking treasury business activities.
11) To establish and acquire companies of different status, to establish branches or acquire banks and other companies or to participate in banks and other companies' capital inside or outside the Sultanate of Oman or to enter into partnership with companies and organizations transacting activities similar to those transacted by the Bank.
12) To play the role of financial consultant in respect of financial investment and generally to carry on all financial business transactions, brokerage deals, financial operations, agency business and to provide financial consultancy services to its corporate customers inside or outside the Sultanate of Oman.
13) To subscribe to the shares of manufacturing projects, to invest the bank’s funds in any investments, to own and sell such investments, to dispose thereof in any other manner and to carry on such business activities as an owner company or as an investor in accordance with the applicable laws in the Sultanate of Oman.
14) To lend monies and to extend credit and financial facilities
15) Providing housing loans or such other loans as may be permitted by the Central Bank of Oman to Omani nationals, GCC nationals or any other nationals as may be permitted by the applicable laws of Oman for the purposes of purchase, construction, development, completion, expansion, repair or maintenance of private homes in the Sultanate of Oman or in such other places or countries as may be permitted by the Central Bank of Oman.
16) To encourage saving schemes and mobilize deposits to be employed by the Bank for the purposes of its objectives.
17) To attract local and foreign capital to contribute in financing construction projects in the Sultanate of Oman, arranging or obtaining local or international loans for the Bank and/ or local real estate projects and the acceptance of foreign deposits and external loans, provided that such activities comply with the regulations stipulated by the Government of the Sultanate of Oman for this purpose.
18) To own land through purchases or appropriation for the purpose of development and/or resale.
19) To carry out the business of housing finance, banking and services related to the acceptance of time deposits, provided that such deposits are not connected in any way to direct credit facilities extended to depositors if such facilities are outside the scope of the Bank's specialty.
20) To carry out banking business and services to customers and others, provided that these be within the limits that enable the Bank to control the loans and credit facilities and to ensure that they are used for the purposes for which they were extended or within the limits that enable the Bank to benefit from banking business and services.
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21) To finance either directly or whilst acting as agents for the Government or any third party social housing projects and other projects aimed at providing homes for low and medium income Omani nationals and for such other groups of persons as the Government of Oman may wish to encourage to own their properties in Oman.
22) To acquire, negotiate and to receive public and private funds.
23) To grant monies in consideration of guarantees in‐kind or personal or mixed either in cash or by making credit to accounts or in consideration of bills, debentures, promissory notes or any other obligations or in consideration of title deed deposits.
24) To issue bonds and certificates and different type of securities after obtaining the approval of the Central Bank of Oman.
25) To finance or assist in financing the sale of houses, buildings, flats, either furnished or otherwise, by way of hire purchase or deferred payment or similar transactions and to institute, enter into, carry on, or assist in financing the sale and maintenance of any such houses, buildings, flats, furnished or otherwise as aforesaid, upon any term whatsoever in accordance with the Central Bank of Oman regulations as existing from time to time and subject to the prior approval of the Central Bank of Oman.
26) To acquire and discount, hire purchase or other agreements or any rights therein (whether proprietary or contractual) and generally to carry on business and to act as financiers, traders in securities and commission agents or in any other capacity in Oman and to sell, barter, exchange, pledge, make advances upon or otherwise deal in properties, houses, buildings, flats furnished or otherwise as aforesaid subject to first obtaining the Central Bank of Oman's approval.
27) To act as insurance agents, intermediaries or financial advisors for the benefit of its customers and to advise, sell and procure the sale of such services to its customers subject to the Central Bank of Oman's and other necessary regulatory approvals.
Licences and Approvals
The Company obtained and maintains valid licences and memberships from the relevant authorities
in order to pursue the activities for which it has been incorporated which are as follows:
Authority Purpose of Licence/
Licence No.
Issue Date Expiry Date
MOCI 1558560 09.06.1997 ‐*
CBO Commercial Banking
License 26.12.2007 Ongoing
* Renewed every five years
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SECTION 6
PURPOSE OF THE BOND ISSUE AND ISSUE EXPENSES
Purpose
The purpose of the issue will be to ‐
Fund the overall financing requirements of the Bank in line with its growth plan
Reduce dependence on large institutional funds
Bridge the maturity gap in the long term buckets expected to arise because of projected funding to large infrastructure/ government/ quasi government projects
Increase single obligor limits of the Bank and thus participate in large project financing.
To meet the Tier II capital requirements of the Bank, which shall be governed by the Central Bank of Oman’s rules and regulations
The Estimated Issue Expenses
The total costs of the subordinated debt issue are estimated at RO 175,000/‐. The details of the
issue expenses estimates are given in the following table:
Details Expense (RO)
Advertising, Promotion, Printing of prospectus, forms, Rating etc. 75,000
CMA listing and prospectus approval fee 4,500
Issue Management/legal/trustee fees 50,000
Mis. Expenses /Contingency 45, 500
Total estimated issue expenses 175,000
The issue expenses are collected @ 5 Baizas per Bond. In case the actual issue expenses exceed the
collected amount, the excess shall be borne by the Bank.
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SECTION 7
TERMS AND CONDITIONS OF THE BOND ISSUE
1. The Issue
The Bonds will be created and issued by the Bank which is incorporated and registered as a
Company in the Commercial Register maintained by the MOCI (C.R. No 1558560) and as a
Commercial Bank in Oman. The Issue is governed and has been made pursuant to the
Articles and the Laws of Oman.
2. Nominal Value & Issue Price
Each Bond shall have a nominal value of RO 1.000 (Rial Omani One) and the Issue Price of
RO 1.005 (Rial Omani One and Baizas Five) and is inclusive of Baizas 5 (Baizas Five) as Issue
Expenses.
3. Allotment and issue of Bonds
The allotment of Bonds is deemed to be made on the next day of closing of subscription.
Validity of the allotment shall be subject to the approval of all relevant authorities.
4. Redemption
The Bonds shall be redeemed in full, by way of cheque, or electronic transfer at the Issuer’s
discretion, to be made out in favour of the then registered holders thereof, on the
redemption date or the call option date. The redemption date of the Bonds shall be 7
(Seven) years from the Allotment Date or the date on which the bank exercises its call
option, which shall be at end of 5 years from the Allotment Date or later, subject to the
approvals of the EGM and CBO. The Bonds are not redeemable at the initiative of the
Bondholder or without the consent of the CBO, in case of the call option.
5. Call Option
Subject to the approval of the CBO, the Bank will have a call option to redeem the Bonds at
the end of 5 (Five) years.
6. Title
The MCDC shall act as the Registrar and transfer agent with respect to the Bonds and shall
also act as the Trustee in accordance with the terms of a Trust Deed which shall be entered
into by and between the Bank and the Trustee. The title to the Bonds passes on the
recordation of the transfer in the Bondholders Register maintained by the MCDC. The
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registered owner of the Bonds save as otherwise required by the Laws of Oman will be
treated as the absolute owner of the Bonds for all purposes.
7. Interest payments
Interest on the Bonds shall accrue with effect from the Allotment Date (i.e. one day after
the closing of subscription). All further interest payments shall take place semi‐annually in
arrears. Those payments will be made to the Bondholders whose names appear on the
Register on the designated Interest Payment Record Dates shown below.
Interest Payment Record Dates
15th December
15th June
The first interest payment record date will be 15th June 2011.
The interest payments shall be made to the Bondholders whose names appear on the
Register as of the relevant record date. Interest payments shall be made by cheque or
electronic transfer, at the discretion of the Issuer to the Bondholders. Interest cheques (or
electronic payments) will be mailed by registered mail to respective Bondholders within one
week of the respective Interest Payment Record Date.
8. Interest rate
Interest shall be calculated on the Face Value of the Bond at an interest rate of 5.5% (Five
and a half percent) per annum. The interest rate shall remain fixed at the aforesaid rate for
the entire tenor of the Bond. Interest calculation shall be made on the basis of the number
of days in an interest period and a 365 (Three Hundred and Sixty Five) day year.
9. Default interest
In the event that any interest payable by the Issuer under conditions 7, 8 and 21 of this
terms and conditions is not paid on the due‐date or otherwise in the manner provided by
conditions 7, 8 and 21, the Issuer shall pay default interest at the rate of 1% p.a. (One
percent per annum) over and above the applicable rate of interest on the overdue sum from
the date of default up to the date of actual certification by the Issuer to the Trustee that
payments have been made. So long as the default continues, the default interest shall
continue to accrue on the same basis and shall be compounded annually.
10. Listing on the MSM
The Bonds shall be listed on the MSM. The Issue Manager shall complete all the formalities
relating to the listing of the Bonds on the MSM.
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11. Registration of Transfers
The administration of registration of transfers of Bonds shall be maintained by MCDC, the
transfer agent which is normally responsible for maintaining the register of Shares, bonds
and other listed securities of all companies listed on the MSM. MCDC will act as the
Registrar to the Bonds and maintain a register setting out the names and addresses, the
number of Bonds held and the bank account details of the Bondholders.
12. Trading and transferability of Bonds and restrictions on transferability
The Registrar will maintain a separate register of Bondholders, in which it will record
transfers of Bonds that take place through trading on the MSM. Transfers may be made for
a minimum of one Bond and transfer of any fractional Bond shall not be allowed.
Bondholders may sell their Bonds, or acquire additional Bonds, through the MSM by placing
either a sell order, or a buy order, through any MSM registered stockbroker. Trading
through the MSM, as well as settlements and transfers through that market shall be
governed under the rules applicable to trading of corporate bonds issued by MSM and the
Laws of Oman.
The buyer shall provide his/her details to his/her broker who will in turn provide the buyer’s
details to the Registrar of the Bond in the buyer’s name. Bonds may be pledged, donated or
bequeathed by notifying the Registrar to facilitate all necessary formalities.
MCDC will effect the registration of transfer of any Bonds. Any charges levied by the
Registrar shall be borne by the buyer and the seller of the Bonds in accordance with the
regulations. All transfers of Bonds and entries on the register of the Bondholders as
maintained by the Registrar will be made subject to the regulations concerning transfer of
Bonds.
13. Variation of rights
The terms and conditions attaching to the Bonds shall be capable of amendment under the
following circumstances:
13.1 In the event that any term or condition thereof needs to be amended in order to comply
with the Laws of Oman, or change in the Laws of Oman, or any regulation of CBO, the CMA,
the CBO, the MSM, or MOCI, the Issuer shall be entitled to enforce such change or
amendment forthwith, on condition that each holder of the Bond shall be duly notified by
registered mail of such amendment, within 14 days.
13.2 In the event that the Issuer intends proposing any other amendment or variation to the
terms and conditions attaching to the Bonds, it shall call a meeting of Bondholders for such
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purpose, who shall be entitled to consider, and vote upon such variation or amendment by
way of formal meeting to be held, other than as specifically provided for herein, in
accordance with procedures similar to that applying to general meetings of shareholders of
public companies under the CCL and the Laws of Oman.
14. Meetings of the Bondholders, modifications and waiver
The Trust Deed contains provision for convening meetings of Bondholders as per the CCL
that considers matters affecting their interest as proposed by the Issuer, including the
modification of any of these conditions or any provisions of the Trust Deed. Any such
modification may be made if sanctioned by a Bondholders’ resolution as provided for in the
Trust Deed.
14.1 The resolutions of the Bondholders’ general meeting shall not be valid unless such meeting
is attended by, personally or by proxy, a number of Bondholders representing at least two‐
thirds of the Bonds of a certain issue. Failing such quorum, a second meeting shall be
convened to discuss the same agenda. The date of the second meeting shall be notified to
the Bondholders in the same manner followed with regard to the first meeting at least one
week prior to the date set for the second meeting. A quorum representing one‐third of the
Bonds shall be sufficient for the second meeting, provided such second meeting is held
within one month from the date of the first meeting. However, a resolution to extend the
redemption period of the bonds or reduce the rate of interest or the principal debt or the
securities or in way prejudice the rights of the Bondholders, shall not be adopted unless the
meeting is attended by Bondholders who represent two‐third of the bonds. Resolutions
shall be adopted by two‐thirds majority of the Bonds represented at the meeting.
14.2 In all circumstances, voting shall take place by way of a poll, in terms whereof each Bond
shall represent 1 (One) vote. Resolutions shall be adopted by a two‐thirds majority of the
Bonds represented at the meeting through Bondholders present in person or by proxy.
14.3 Notwithstanding any other matters on which a Bondholders’ Resolution would be required,
Bondholders’ Resolution will be required in case of any proposal made by the Issuer to:
i) modify the call option, or the dates on which interest is payable in respect of the Bonds
or the maturity of the Bonds except pursuant to the call option
ii) reduce or cancel the principal amount or interest on the Bonds or modify the date of
payment in respect of the Bonds
iii) change the currency of payment of the Bonds
iv) sanction the exchange or substitution of the Bonds for, or the conversion of the Bonds
into, notes, debentures, debenture stock or other obligations or securities of the Issuer
or any other body corporate formed or to be formed
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14.4 The Trustee may agree as per the powers vested in it by the Trust Deed without the consent
of the Bondholders, to (i) any modification of any of the provisions of the Trust Deed which
is of a formal, minor or technical nature or is made to correct a manifest error, and (ii) any
other modification (except as mentioned in the Trust Deed), and any waiver or
authorisation of any breach or proposed breach, of any of the provisions of the Trust Deed
which does not, in the sole the opinion of the Trustee materially prejudice the interests of
the Bondholders. Any such modification, authorisation or waiver shall be binding on the
Bondholders and, if the Trustee so requires, shall be notified by the Issuer to the
Bondholders as soon as is reasonably practicable. In the event that the Issuer fails to notify
the Bondholders within a week, the Trustee shall be at liberty to notify the Bondholders.
14.5 In connection with the exercise of its functions (including but not limited to those in relation
to any proposed modification, authorisation or waiver) the Trustee shall have regard to the
interests of the Bondholders as a class and shall not have regard to the consequences of
such exercise for individual Bondholders and the Trustee shall not be entitled to require, nor
shall any Bondholder be entitled to claim from the Issuer any indemnification or payment in
respect of any tax consequences of any such individual Bondholders.
15. Further Issues
The Issuer shall be at liberty from time to time to make further issues of bonds or any other
debt, equity or hybrid (a combination of debt and equity) instrument including debt
instruments ranking in priority to the Bonds in accordance with the CCL and the Laws of
Oman.
16. Security & Bondholder’s Claim over the Assets
The Bonds will be unsecured and subordinated to the senior debt. Articles 85, 86 and 87 of
the Banking Law of 2000 set out the priority of payments on the liquidation of a bank.
Assets held by the Bank in a fiduciary capacity are excluded from the general pool of assets
and must be distributed to the specified beneficiaries of those assets. Priority is also given
to payment of all liquidation expenses (including fees of the administrator). The remaining
assets of the bank in liquidation are distributed pursuant to Article 87 on a pro rata basis in
the following order of priority:
unpaid monthly salaries within the limit of three months or R.O. 1,000, whichever is
less, plus employees’ claims related to other entitlements
claims by the Deposit Insurance Scheme, as a guarantor to the deposits
claims of the CBO
claims of “other creditors” of the bank in liquidation
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In respect of repayment of principal and interest represented by the Bonds, the
Bondholders will be unsecured and subordinated to Senior Liabilities of the Bank and the
Bond will form a part of the Issuer’s Subordinated Liabilities. The rights of the Bondholders
in respect of repayment of principal and interest represented by the Bonds will, however,
rank pari passu with all other Subordinated Liabilities of the Issuer and have priority over
payment to Shareholders.
It is recorded that the subordinated Bonds are specifically intended to comply with the
requirements of the regulations and laws applicable to banks registered and incorporated in
Oman as they relate and refer to second tier (Tier II) capital.
In this Clause:
“Senior Liabilities” mean liabilities of the Issuer, which are repayable ahead of Subordinated Liabilities and Share Capital; and
“Subordinated Liabilities” mean liabilities of the Issuer, which are stated to be repayable after payment of Senior Liabilities and ahead of Share Capital.
17. Status
The Bonds constitute a direct obligation of the Issuer and shall, save for such exceptions as
may be provided for by the Laws of Oman, at all times rank pari passu without any
preference among themselves.
18. Undertakings and Covenants
As long as any Bond remains outstanding (as defined in the Trust Deed), the Issuer shall duly
obtain and maintain in full force and effect all governmental approvals including any
exchange rules in the market and valid transfer approvals, which may, as a result of any
change in, or amendment to, the Laws of Oman subsequent to the commencement of the
period of subscription of the Bonds, become necessary or desirable under the Laws of Oman
for the execution, delivery and performance of the Bonds by the Issuer for the validity and
enforceability of the Bonds. It shall also obtain all necessary governmental and
administrative approvals in Oman for the payment of all amounts due in respect of the
Bonds as is required by the terms of the Issue.
19. Corporate reorganization
In the event of any consolidation or amalgamation of the Issuer with any company or other
corporate entity (other than a consolidation or amalgamation) in which the Issuer is the
continuing entity), or in the event of the occurrence of the sale or transfer of ownership of
all the assets of the Issuer, the Issuer will forthwith notify the Bondholders of such event
and It shall (to the extent permitted by law) cause the company or the corporate entity
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resulting from such consolidation or amalgamation or which might have acquired such
assets, as the case may be, to execute a trust deed supplemental to the Trust Deed (in form
and substance satisfactory to the Trustee) such that the new entity assumes the obligations
of the Issuer under the Trust Deed.
20. Ratings
The Issuer has been rated by two leading credit rating agencies in the world namely Fitch
and CI. The long term ratings given by these agencies to the Issuer are given below:
Rating Agency Rating ‐ Fitch: BBB+ ‐ CI: BBB+
The Issuer undertakes to keep its rating under surveillance for the entire tenor of the Bond.
The ratings are reviewed annually or earlier at the discretion of the rating agency.
21. Events of Default
The following shall be treated as ‘Events of Default’ in connection with the Bonds being
issued:
1. The Issuer fails to pay any interest in respect of the Bonds until a period of 45 days after
the relevant interest payment date.
2. An order has been issued or legislation passed directing the liquidation of the Issuer.
3. The Issuer has stopped or intends to stop the payment of its debts generally or ceases to
carry on business or substantially the whole of its business.
4. The Issuer sells, transfers or otherwise disposes of, directly or indirectly, the whole or a
substantial part of its undertaking or assets except a disposal at market value or in the
ordinary course of its business or a disposal the terms of which have previously been
approved by the majority of not less than two‐thirds in value of the Bondholders. For
this purpose, a certificate from the Auditors of the Issuer for the time being shall be
obtained stating that, in its opinion, the business or assets disposed of are not
substantial. Such a certificate shall be conclusive evidence.
5. The Issuer becomes insolvent or is unable to pay its debts as they mature or applies for
the appointment of a liquidator or takes any proceedings under the prevailing laws for a
deferment, readjustment, compromise or any such arrangement with and for the
benefit of the creditors.
In each of such aforesaid events of default, the Trustee shall convene a meeting of the
Bondholders and, if so directed by the Bondholders’ resolution, shall give notice to the
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Issuer that the Bond will immediately start to accrue default interest as per Condition 9
mentioned above.
22. Prescription
Claims against the Issuer in respect of principal and interest shall become time‐barred
unless made within the limitation periods provided by the Laws of Oman.
23. General duties and obligations of the Issuer to Bondholders
23.1 The Issuer shall conduct its business of operating a bank in accordance with the laws of
Oman, as well as all bank and securities laws and regulations as may apply to it, or become
applicable to it during the period of issue of the Bonds.
23.2 The Issuer shall prepare interim and annual financial statements in accordance with the
laws applicable to banks in Oman. Any Bondholder shall be entitled to be furnished with a
copy of any released financial results, or Annual Report, within 14 (Fourteen) days of a
written request for such, which may be made to the Issuer.
23.3 The Issuer shall, in accordance with the regulatory requirements of Oman, publish its
financial results timely in at least 1 (One) Arabic and 1 (One) English language newspaper, in
each interim and annual financial reporting period, immediately after filing them with the
MSM electronic transmission system.
23.4 In the event that the Bonds for any reason whatsoever become delisted from the MSM
while still in issue, or are at any time removed from the electronically recorded registration
system, the Issuer shall be entitled to issue Bond certificates as valid documents of title in
respect of any Bonds then outstanding, as substitute to the electronic recording of
ownership and title thereof.
24. Enforcement
At any time after the Bonds becoming due and payable and remaining unpaid, the Trustee
may, at its discretion and without further notice, institute such proceedings against the
Issuer as it may think fit to enforce the terms of the Trust Deed and the Bonds.
25. Other rights attaching to the Bonds
The Bonds, while being transferable, are not negotiable and cannot be dealt with as a bill of
exchange or under the laws applicable to bills of exchange or similar commercial banking
instrument. However, the Bonds shall be capable of being pledged, ceded, sold,
bequeathed, donated or dealt with in any way as may be ordinarily allowed under the Laws
of Oman in respect of listed and stock market tradable securities.
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26. Subscription period
The bond issue shall open for subscription on December 12, 2010 and shall close on
December 15, 2010 (both days inclusive).
27. Joint and fraction holdings
No joint holdings of a Bond shall be capable of registration. Each Bond shall be registered in
the name of a single person or a single legal entity. The Issuer shall not be held responsible
for any misappropriation, loss or damage which any person may suffer due to a loss arising
from a holding which is, directly, or indirectly jointly held. No person shall be capable of
registering a fraction of a holding of a Bond.
28. Notices
Notices to the Bondholders will be sent by the Issuer by mail (airmail if overseas) at their
respective addresses on the Register, and will be deemed to have been given on the date of
mailing. Notices will also be published in one Arabic and one English newspaper having
general circulation in Oman, and each such notice shall be deemed to have been given on
the date of such publication or if published more than once or on different dates, on the
first date on which such publication is made. Copies of all notices shall also be given by the
Issuer to CMA.
29. Documents for inspection
The Articles, the Trust Deed and the audited financial statements of the Issuer for the
financial year ended December 31, 2009 and its unaudited financial statements for the nine
months ended on September 30, 2010 shall be available for inspection with the Trustee, at
the specified offices of the Trustee and with the Issue Manager.
30. Applicability of the Central Bank of Oman Rules & Regulations and Commercial Companies Law
The issue of the Bonds shall be governed by the CCL and the Laws of Oman. To the extent
that any clause herein does not comply with, or contradicts any Article or Chapter of such
Law, the Law shall override the provision contained in these terms and conditions. Nothing
contained herein shall preclude any matter or dispute arising from the Bond issue from
being adjudicated by a competent court of Oman. As the Bond issue is to meet the tier II
capital requirements of the Bank, the rules and regulations of the Central Bank of Oman
shall have an overriding influence on this current issue.
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31. Trusteeship
MCDC will be appointed as Trustee to the Bondholders to oversee the compliance of the
Issuer with the terms and conditions of the issue, and to oversee, co‐ordinate and monitor
the status and the rights of the Bondholders.
32. Governing law and jurisdiction
These Terms and Conditions shall be governed by and construed in accordance with the
Laws of Oman and any disputes arising between the Trustee, on behalf of the Bondholders
and the Issuer in respect of these Terms and Conditions or any interpretation thereof shall
be subject to amicable negotiations between the Issuer and the Trustee on behalf of the
Bondholders. Failing a satisfactory resolution of the dispute, the disputed matter may be
referred to the exclusive jurisdiction of the Primary Commercial Court of Oman for its
adjudication.
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SECTION 8
RIGHTS AND RESPONSIBILITIES
TRUSTEE
The following are the rights and responsibilities of the Trustee as per the terms of the Trust Deed
entered into between the issuer and MCDC:
1. The Responsibilities and Duties of the Trustee
Calling for periodical reports from the Issuer and inspect books of accounts, records,
registers, the assets and the documents and reports relating to the credit rating of the
Issuer.
Monitoring material contracts, events, actions and announcements (including publications
(including publication of annual financial statements) entered into or announced by the
Issuer, from time to time. The Issuer shall inform the Trustee of any material transaction or
contract that could be judged to affect the rights of Bondholders.
Ensuring that interest due on the Bonds has been paid to the Bondholders on the relevant
interest due dates.
Monitoring the Issuer's adherence to the terms and conditions of the Issue and assessing
whether or not the Issuer is able to discharge the claims of Bondholders as and when they
become due.
Ascertaining that the Bonds have been redeemed in accordance with the terms &
conditions of the Issue.
Acting upon any reasonable request of a holder of the Bonds, the auditors of the Issuer, the
MOCI, CBO, the CMA, or the Issuer itself, who may alert MCDC to a situation which may
constitute an Event of Default or breach which has, or potentially may have a material and
substantial effect on the rights of the Bondholders.
Calling or causing to be called the general meeting of Bondholders or on a request by one or
more Bondholders who own at least 10% of the total issued Bonds. The call for the meeting
shall be pursuant to Article 92 of the CCL.
Ascertaining that the funds raised through this Issue are utilized in accordance with the
Prospectus.
Acting as an intermediary in resolving any material dispute arising between the Issuer and
any individual Bondholder, or collective number of Bondholders on issues directly relevant
to the terms and conditions relating to the Bonds.
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Carrying out such other acts as necessary for the protection of the interests of the
Bondholders.
2. Rights and Powers of the Trustee
The Trustee shall have the following specific powers, in addition to any other powers that may be conferred upon it by the Laws of Oman:
The Trustee may act on the opinion or advice of, or information obtained from, any expert
and will not be responsible to anyone for any loss suffered by so acting. Any such opinion,
advice or information may be sent or obtained by letter, telex or fax and the Trustee will not
be liable to anyone for acting in good faith on any opinion, advice or information purporting
to be conveyed by such means even if it contains some error or is not authentic.
The Trustee need not notify anyone of the execution of the Trust Deed or do anything to
find out if an Event of Default has occurred. Until it has actual knowledge or express notice
to the contrary, the Trustee may assume that no such Event of Default has occurred and
that the Issuer is performing all its obligations under the Trust Deed and the Conditions.
The Trustee will not be responsible for having acted in good faith pursuant to a resolution
adopted in a meeting of the Bondholders in respect of which minutes have been made and
signed even if it is later found that no Event of Default has occurred and that the Issuer is
performing all its obligations under the Trust Deed and these terms and conditions.
If the Trustee, in the exercise of its functions, requires to be satisfied or to have information
as to any fact or the expediency of any act, it may call for and accept as sufficient evidence
of that fact or the expediency of that act a certificate signed by an Authorised Signatory of
the Issuer as to that fact or to the effect that, in their reasonable opinion, that act is
expedient and the Trustee need not call for further evidence and will not be responsible for
any loss occasioned by acting on such certificate.
The Trustee may deposit the Trust Deed and any other documents with any bank or entity
whose business includes the safe custody of documents or with any lawyer or firm of
lawyers believed by it to be of good repute and may pay all sums due in respect thereof.
The Trustee may, if it considers it expedient in the interests of the Bondholders, employ and
pay any professionals selected by it, for the performance of any functions and exercise of
any powers of the Trustee to transact or conduct, or assist in transacting or conducting any
business and to do or assist in doing all acts required to be done by the Trustee (including
the receipt and payment of money) pursuant to the terms of this Trust Deed. If the Trustee
exercises reasonable care in selecting an agent, the Trustee will not be responsible to
anyone for any misconduct or omission by such agent so employed by it.
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The Trustee will not be liable to the Issuer or Bondholder by reason of having transferred
any monies to a Bondholder based on the information recorded against the name of a
registered Bondholder with the registrar.
Unless ordered to do so by a court of competent jurisdiction, the Trustee shall not disclose
or be required to disclose to any Bondholder or to any other person any confidential
financial or other information made available to the Trustee by the Issuer unless the Trustee
otherwise considers it necessary to so disclose for the proper discharge of its duties.
As between itself and the Bondholders, the Trustee may determine all questions and doubts
arising in relation to any of the provisions of the Trust Deed. Such determinations, whether
made upon such a question actually raised or implied in the acts or proceedings of the
trustee, will be conclusive and shall bind the Trustee and the Bondholders.
The Trustee may determine whether or not an Event of Default is in its opinion capable of
remedy. Any such determination will be conclusive and binding on the Issuer and the
Bondholders. If the Trustee so decides that an Event of Default has occurred and/or is
directed by the Bondholders pursuant to the passing of a Bondholders’ Resolution to
commence proceedings against the Issuer, the Trustee shall commence proceedings to
recover principal, interest and/or default interest on behalf of the Bondholders.
The Trustee will not be responsible for the receipt or application by the Issuer of the
proceeds of the issue of the Bonds.
BONDHOLDERS
Bondholder’s Rights
The Bondholders shall enjoy equal rights inherent in the ownership of Bonds as follows:
The right to receive principal amount of the Bonds in accordance with condition 4 and 5 of
Section 7 of this Prospectus.
The right to receive interest payable on the Bonds in accordance with conditions 7, 8 and 9
of Section 7 of this Prospectus.
The right to dispose or transfer the Bonds in accordance with condition 12 of Section 7 of
this Prospectus and the Laws of Oman.
In the event of the liquidation of the Bank, the right to claim any amounts outstanding
under the Bonds as a debt owed by the Bank.
The right to participate in Bondholders’ meetings and to vote at such meetings in
accordance with the provisions of the Trust Deed and the CCL.
The Bondholder shall have no right to participate in any other meetings of the Bank.
Prospectus: Ahli Bank Bond Issue
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SECTION 9
RELATED PARTY TRANSACTIONS
Related Party Transactions
The Bank enters into transactions with major shareholders, directors, senior management and their
related corporate entities in the ordinary course of business at commercial interest and commission
rates, subject to shareholder approval (as may be required). Pricing policies and terms of other
transactions are approved by the Bank’s management and Board of Directors.
The year end balances in respect of related parties included in the balance sheet are as follows:
2009 2008
RO RO
Directors and Senior Management
Loans and advances 633,001 516,980
Customers deposits 260,664 297,193
Major shareholders
Loans and advances 14,879,945 3,832,924
Due to banks and customer deposits 3,921,867 14,383,267
Investments 1,925,000
Other liabilities 363,649 691,959
Derivatives 61,515,351 ‐
Contingent Liabilities and Commitments 11,259,178 ‐
Transactions with major shareholders are further analysed as follows:
2009 2008 RO ROLoans and advances:
MB Holding and subsidiaries 7,028,298 3,832,924 Ahli United Bank and its subsidiaries 217,142 Others 7,634,506
14,879,946 3,832,924
Prospectus: Ahli Bank Bond Issue
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Due to Banks and customer deposits:
MB Holding and subsidiaries 669,681 7,001 Ahli United Bank and its subsidiaries 149,926 14,375,666 Others 3,102,260
3,921,867 14,382,667
Investments:
Ahli United Bank and its subsidiaries 1,925,000 ‐
Other Liabilities:
Ahli United Bank and its subsidiaries 206,640 601,253Others 157,009 90,706
363,649 691,959
Derivatives:
Ahli United Bank and its subsidiaries 61,515,351 ‐
Contingent Liabilities and Commitments:
Ahli United Bank and its subsidiaries 11,241,838 ‐ Others 17,340 ‐
11,259,178 ‐
The Bank has entered into a master risk participation agreement dated December 27, 2007 with a
shareholder. Under this agreement, the Bank participated in loans and advances amounting to nil as
of December 31, 2009 (December 31, 2008: RO 9 million).
No provision is required in respect of loans given to related parties (2008: nil).
Prospectus: Ahli Bank Bond Issue
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The income and expenses in respect of related parties included in the financial statements are as
follows:
2009 2008
RO RO
Directors and Senior Management
Interest Income 36,268 55,502
Interest Expense 2,276 757
Board Remuneration proposed 75,000 44,600
Board Sitting fees 42,930 37,400
Major shareholders
Interest Income 604,459 166,618
Interest Expense 135,832 109,358
Fees and Other income 68,990 ‐
Other operating expenses 866,560 691,959
The Bank has also entered into a Technical and Management Services Agreement (TMSA) with a
major shareholder. Under the terms of this agreement, the Bank will pay 2% of the net profit before
tax and Management fee to the shareholder for services provided. An amount of RO 219,654 was
included in the operating expenses during 2009 (2008: RO 138,688).
Compensation of the key management personnel is as follows:
2009 2008
RO RO
Salaries and allowances 481,556 422,209
End of service benefits 9,117 6,811
Total compensation paid to key personnel 490,673 429,020
Prospectus: Ahli Bank Bond Issue
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SECTION 10
HISTORICAL FINANCIAL PERFORMANCE
Income Statement
Particulars 2010 ( 9 months up to September)(unaudited)
2009 2008 2007 2006
RO '000 RO RO RO RO
Interest income 25,392 28,088,190 22,967,237 13,630,636 12,593,504
Interest expense (11,688) (14,417,598) (11,638,616) (7,635,187) (6,007,266)
Net interest income 13,704 13,670,592 11,328,621 5,995,449 6,586,639
Fees and commissions income 4,693 4,077,242 2,196,496 1,254,258 502,615
Other income 340 149,148 709,736 399,826 464,641
Net operating income 18,737 17,896,982 14,234,853 7,649,533 7,553,895
Staff expenses (3,478) (4,361,185) (4,042,410) (2,184,992) (1,187,193)
Depreciation (841) (871,187) (383,192) (175,493) (53,574)
Other expense (2,262) (2,688,874) (3,256,355) (1,921,954,) (1,795,016)
Loan loss provision (359) (266,108) 139,319 (857,657) (56,455)
Net operating expenses (6,940) (8,187,354) (7,542,638) (5,140,096) (3,092,238)
Profit before taxation 11,797 9,709,628 6,692,215 2,509,437 4,461,658
Income tax expense (1,434) (1,168,464) (758,738) (290,783) (547,468)
Net profit for the year (10,363) 8,541,164 5,933,477 2,218,654 3,914,190
Prospectus: Ahli Bank Bond Issue
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Balance Sheet
Particulars 2010 ( As of
September)(unaudited)
2009 2008 2007 2006
ASSETS RO '000 RO RO RO RO
Cash and balances with the Central Bank
33,211 108,819,765 14,765,276 9,008,881 2,145,989
Due from other bank 25,713 7,208,923 10,116,271 384,265 9,594,196
Financial investments‐ held for trading 6,042 6,198,219
Investment securities 27,554 36,216,426 46,004,380 55,311,308 11,204,813
Loans and advances to customers 575,306 443,562,243 375,297,761 239,412,791 150,322,598
Property and equipment 8,639 9,190,131 8,283,462 713,539 558,184
Deferred tax asset 357 344,455 340,341 326,628 209,628
Other assets 6288 4,517,870 1,597,046 809,105 1,142,743
Total 683,110 616,058,032 456,404,537 305,966,517 175,178,151
LIABILITIES AND EQUITY
LIABILITIES
Customers’ deposits 528,732 466,710,336 319,256,295 152,220,863 92,514,166
Other borrowed funds 6,613 7,863,459 23,937,292 29,100,000 32,950,000
Due to other banks 31,663 35,149,926 18,426,459 39,611,657 14,850,000
Taxation 2,058 1,756,861 1,075,808 606,160 738,109
Other liabilities 15,753 11,958,960 6,653,550 3,439,509 2,460,177
584,819 523,439,542 369,349,404 224,978,189 143,512,452
EQUITY
Share capital 71,238 67,846,154 64,615,384 64,615,384 21,000,000
Premium 6,290,440 6,290,440 ‐
Legal reserve 7,034 7,033,681 3,119,895 2,526,547 2,304,682
General banking reserve 1,559 1,558,554 1,131,496 834,822 1,877,389
General loan loss reserve 5,663 3,932,867 2,272,769
Cumulative change in fair value 152 93,558 (159,405) (292,733) (10,884)
Retained earnings 12,645 12,153,676 9,803,554 7,013,868 6,494,512
98,291 92,618,490 87,055,133 80,988,328 31,665,699
Total 683,110 616,058,032 456,404,537 305,966,517 175,178,151
Prospectus: Ahli Bank Bond Issue
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Notes
Loans and Advances to customers:
2009 2008
RO RO Corporate lending 181,806,454 137,948,918
Mortgage and consumer lending 264,756,730 240,094,193
Gross loans and advances 446,563,184 378,043,111
Less: Allowance for impairment losses (3,000,941) (2,745,350)
443,562,243 375,297,761
An age analysis of the Bank's gross loans and advances is set out below:
Loans not in
arrears Loans in arrears Total
1‐30 days 31‐60 days
61‐89 days
90 days or more
Figures in RO
31 December 2009 425,417,683 8,683,610 5,174,786 5,875,833 1,411,272 446,563,184
31 December 2008 363,317,709 9,830,612 2,360,864 1,824,078 709,848 378,043,111
Loan and advances within 1 to 89 days category are considered by the Bank as past due but not
impaired.
The fair value of collateral that the Bank held as at 31 December 2009 towards loans and advances not impaired amounted to RO 328,105,000 (31 December 2008 RO 282,505,611)
An economic sector‐wise distribution of loans and advances before and after taking into account collateral held:
Economic Sector Gross Exposure Net Exposure Gross Exposure Net Exposure
2009 2009 2008 2008
Figures in (RO '000)
Wholesale & Retail 38,997 33,156 24,056 12,976
Mining and quarrying 20,991 ‐ 3,823 3,803
Construction 47,692 ‐ 43,242
Manufacturing 28,890 25,890 41,909 37,695
Electricity, gas and water 17,067 17,067 ‐ ‐
Prospectus: Ahli Bank Bond Issue
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Transport & Communication 6,062 6,062 ‐ ‐
Financial Institutions 2,549 ‐ 4,314 4,292
Services 19,260 ‐ 8,894
Personal Loans 264,756 34,403 240,096 33,238
Non‐resident lending 299 299 1,389 1,382
Others ‐ ‐ 10,320 16
Total 446,563 116,877 378,043 93,402
Impairment allowance for loans and advances to customers:
2008 2009
Corporate
lending
Mortgage &
consumer
lending
Total Corporate
lending
Mortgage &
consumer
lending
Total
356,398 2,448,450 2,804,848 At 1 January 356,398 2,316,080 2,672,478
‐ 100,157 100,157 Charge for the
year ‐ 293,928 293,928
‐ (232,527) (232,527) Recoveries ‐ (64,613) (64,613)
356,398 2,316,080 2,672,478 At 31 December 356,398 2,545,395 2,901,793
Loan impairment expense, net of recoveries include a loan write off of OMR 10,517 (31 December
2008: OMR 18,473).
Interest is reserved for all non‐performing loans and advances where recovery is considered
doubtful. As at 31 December 2009, the total balance of loans and advances on which interest is not
being accrued, or where interest is suspended, amounted to OMR 1,411,272 (31 December 2008:
OMR 709,848). The fair value of collateral that the Bank holds relating to loans individually
determined to be impaired as at 31 December 2009 amounts to OMR 1,580,500 (31 December
2008: OMR 2,135,500). The collateral consists of cash, securities and properties.
In accordance with the requirements of the CBO’s circular referenced BM 977, the Bank is required
to create a portfolio‐based provision (general loan loss provision) by debiting the income statement.
On 29th December 2007, the CBO has permitted the Bank to create a general loan loss reserve in
lieu of such general loan loss provisions, for a temporary period of three years from 1 January 2008
to 31 December 2010. Accordingly, the Bank has set aside an amount of OMR 3.9 million (31
December 2008: OMR 2.273 million) as a non‐distributable loan loss reserve in its statement of
equity.
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Financial Investments:
Available for
Sale Held to Maturity
Held For Trading
Total Cost
Figures in RO
31 December 2009
Government development bonds‐ Oman
‐ 1,135,000 6,198,219 7,333,219 7,367,863
Certificates of Deposit 30,000,000 ‐ ‐ 30,000,000 30,000,000
Listed debt securities 2,453,603 130,700 ‐ 2,584,303 2,552,218
Listed funds 2,497,123 ‐ ‐ 2,497,123 2,447,584
Total (RO) 34,950,726 1,265,700 6,198,219 42,414,645 42,367,665
31 December 2008
Government development bonds‐ Oman
‐ 1,535,000 ‐ 1,535,000 1,535,000
Government treasury bills ‐ 41,907,726 ‐ 41,907,726 41,802,353
Listed debt securities 1,120,177 1,412,180 ‐ 2,532,357 2,697,040
Listed funds 29,297 ‐ ‐ 29,297 22,585
Total (RO) 1,149,474 44,854,906 ‐ 46,004,380 46,056,978
Customer Deposits:
2009 2008
RO RO
Time deposits 364,976,601 296,550,176 Demand and saving deposits 101,733,735 22,706,119
466,710,336 319,256,295
Other Borrowed Funds:
2009 2008
RO RO
Fixed rate bonds 6,000,000 6,000,000
Syndicated loan ‐ 15,400,000
NBO Loan 1,863,459 2,537,292
7,863,459 23,937,292
Prospectus: Ahli Bank Bond Issue
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Key Financial Ratios
30 ‐Sep‐10 31‐Dec‐09 31‐Dec‐08 31‐Dec‐07 31‐Dec‐06
Operational Efficiency
Net Interest Margin 2.5% 2.8% 2.33% 1.43% 2.25%
Interest Income/Operating Income 73% 76% 80% 78% 87%
Non‐interest Income/Operating Income
27% 24% 20% 22% 13%
Cost to Income Ratio 35.1% 44.3% 54.3% 56.0% 37.3%
Profitability
ROE (%) 14.10% 9.50% 7.10% 3.90% 12.30%
ROA (%) 2.00% 1.60% 1.60% 0.90% 2.40%
Valuation Measures
P/E 13.87 18.10 17.89 61.40 31.94
P/B 1.95 1.67 1.22 1.68 3.95
Asset Quality
NPL/Gross Loan 0.33% 0.32% 0.19% 0.37% 0.92%
Liquidity and Solvency
Gross Loan to Customer Deposits 109% 96% 118% 159% 165%
Gross Loan as % Total Assets 85% 72% 83% 79% 87%
Deposits as % Total Liabilities & Equity 77% 76% 70% 50% 53%
Capital Adequacy 15.66% 17.62% 23.36% 40.85% 33.13%
1. Net interest margin is calculated on the average interest bearing assets
2. ROE & ROA for 2010 are annualized
3. P/E is based on the market price as on the relevant dates and the annualized EPS (calculated on basis of weighted average number of shares outstanding during the year adjusted for bonus issue)
4. P/B is calculated on the basis of market price and book values on relevant dates
Prospectus: Ahli Bank Bond Issue
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Information regarding Bonds issued previously
Instrument : Non‐guaranteed Bonds (5.55%)
Issued & Subscribed : 6,000,000 Bonds
Par Value : RO 1.000
Issue Date : April 20, 2004
Maturity Date : May 15, 2011
Market Capitalization : RO 6,132,000
The Bank is servicing the previously issued Bonds without any default in interest payments.
Litigations
(i) There is no litigation against the Bank which could have an adverse effect on the Bank’s
operations
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SECTION 11
PEER GROUP COMPARISON
Licensed Local Commercial Banks in Oman (As at December 31, 2009)
Name of the Bank Date of
Establishment No. of Authorised
Offices No. of Operating
Offices
1. National Bank of Oman 1973 65 64
2. Oman Arab Bank 1973 45 45
3. Oman International Bank 1975 84 83
4. Bank Muscat 1981 127 126
5. Bank Dhofar 1990 55 53
6. Bank Sohar 2007 17 14
7. Ahli Bank 1997 13 13
Source: CBO Annual Report 2009
Market Share of Commercial Banks
ABOB5%
BKDB14%
BKMB44%
BKSB9%
NBOB15%
OAB6%
OIBB7%
Market share by loans and advances in Q4 2009
Source: Company Financial Statements
Prospectus: Ahli Bank Bond Issue
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Comparative Financials (Based on 2009 Audited Financial Statements)
(Figures in RO million unless stated)
Ahli Bank Bank
Muscat NBO OIB Bank
Dhofar Bank Sohar
Net Interest income 14 174 57 32 49 23
Other operating income 4 117 25 11 16 6
Total operating income 18 291 82 43 65 29
Net profit 9 74 21 22 25 8
EPS (RO) 0.013 0.068 0.019 0.024 0.034 0.008
Dividend per share (RO) 0.007 0.020 0.012 0.022 0.015 ‐
Net Interest Margin 2.8% 3.3% 3.6% 3.8% 4.0% 2.6%
Interest Income/Operating Income
76.4% 59.9% 69.4% 74.0% 75.7% 78.5%
Cost to Income Ratio 44.3% 28.2% 42.5% 45.1% 36.4% 59.1%
ROE (%) 9.5% 10.3% 8.5% 12.5% 12.9% 7.9%
ROA (%) 1.6% 1.2% 1.1% 2.1% 1.8% 0.9%
NPL/Gross Loan 0.3% 5.0% 5.0% 10.5% 4.8% 0.24%
Gross Loan to Customer Deposits
95.7% 123.6% 113.4% 94.0% 114.2% 91.7%
Gross Loan as % Total Assets 72.5% 69.3% 79.5% 66.0% 84.6% 78.0%
Deposits as % Total Liabilities & Equity
75.8% 59.7% 70.1% 70.2% 74.1% 94.8%
Capital Adequacy 17.62% 15.2% 16.6% 15.3% 14.8% 12.9%
ABOB6%
BKDB13%
BKMB39%
BKSB10%
NBOB15%
OAB8%
OIBB9%
Market share by customer deposits in Q4 2009
Source: Company Financial Statements
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SECTION 12
CORPORATE SNAPSHOT, BUSINESS PLAN AND FUTURE STRATEGY
Background
Ahli Bank SAOG (previously known as Alliance Housing Bank) is a public joint stock company
incorporated in the Sultanate of Oman and is engaged in commercial banking activities. The
registered address of the Bank is PO Box 545, Mina Al Fahal, Postal Code 116, Sultanate of Oman.
The Bank was incorporated in 1997 as a specialised housing bank focusing on the extension of
residential mortgages and listed on the Muscat Securities Market. In January 2007 the Bank
obtained in‐principle approval from the Central Bank of Oman to operate as a fully fledged
commercial bank.
In June 2007, the Bank formed a strategic alliance with Ahli United Bank, a premier pan‐GCC bank
with a UK presence, through 35% ownership in Ahli Bank SAOG and provision of technical services
through a 5 year (renewable) management contract to oversee conversion into a commercial
banking model. In December 2007 the International Finance Corporation (IFC), a 100% subsidiary of
World Bank, acquired a 9.9% ownership in Ahli Bank SAOG through participation in the capital
increase. In December 2007 the capital was increased by RO 50.9 million (US$132.2 million).
In January 2008, Alliance Housing Bank changed its name to Ahli Bank S.A.O.G. and commenced its
commercial banking operations.
The strategic tie ups have contributed to diversifying its business portfolio with varied activities
including retail finance, corporate finance and trade finance. Ahli Bank maintains its leading position
in providing the most convenient housing mortgage facilities to customers in Oman. The Bank has
successfully launched new deposit products and loan products which are competing with the best
ones in the market. It has now established itself as a fully‐fledged Omani commercial bank.
The Bank employed 239 employees as at September 30, 2010.
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Share capital & Shareholding
The authorised share capital of the Bank is 1,000,000,000 shares of 100 baizas each, out of which
678,461,539 shares (2008: 646,153,846) are issued and fully paid up. 32,307,693 shares were issued
during the year as bonus shares out of share premium. Shareholders of the Bank who own 5% or
more of the Bank’s shares, whether in their name, or through a nominee account, and the number
of shares they hold are as follows:
Group Overview
Ahli United Bank BSC (AUB) with asset worth USD 25 billion (June 30, 2010) is a fully fledged
diversified financial services group centred on commercial banking, investment banking, private
banking, asset management and life insurance with an enhanced Sharia’a compliant business focus
and contribution. The AUB Group’s parent company, AUB, is based in Bahrain and the Group has an
operating presence in each of Egypt, Iraq, Kuwait, Libya, Oman, Qatar and the United Kingdom.
Details of the operations in various countries are given in the table below:
Country Name of Subsidiary/Associate Ownership %
UK Ahli United Bank (U.K) PLC 100%
Kuwait Ahli United Bank Kuwait 75%
Qatar Ahli Bank QSC 36.4%
Iraq Commercial Bank of Iraq 56.1%
Egypt Ahli United Bank (Egypt) 85.1%
Oman Ahli Bank S.A.O.G. (Oman) 35%
Libya UBCI (Libya) 40%
Number of Shares
%
September 2010
Ahli United Bank BSC 249,334,614 35.0%
MB Holding and subsidiaries 108,366,414 15.2%
International Finance Corporation 70,560,000 9.9%
Ministry of Defense – Pension Fund 46,305,000 6.5%
474,566,028
Prospectus: Ahli Bank Bond Issue
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AUB has a presence in four out of the six Gulf Co‐operation Council (“GCC”) markets together with
Egypt, Iraq, Libya and the United Kingdom. The Bank is continuously assessing and seeking to
expand in the GCC and to acquire complementary banking platforms in identified secondary
markets in the Middle East and North Africa (“MENA”) region in order to act as a preferred regional
and international intermediary for its clients. The AUB Group’s presence in the United Kingdom
services the need of its gulf clients there and continues to be one of its key preferred overseas
markets for investments and acquisition of secondary residences. Besides ready accessibility to
Organisation for Economic Co‐operation and Development (OECD) markets, the Group’s diverse
geographical footprint also provides a conduit to tapping cross border business and/or investment
flows within the MENA region.
As at September 30, 2010 AUB had the following credit ratings:
Standard & Poor’s: ‘A‐’
Fitch Ratings, Inc.: ‘A‐’
Capital Intelligence Ltd: ‘A’
Products of Ahli Bank
Retail and Premium Banking
Ahli Bank’s retail banking segment principally handles individual customers’ deposits. The unit
provides consumer loans, residential mortgages, credit cards and fund transfer facilities The
extensive product offerings include Savings plan (MyHassad and My Smart),Time deposits, Loans
products ( My Loan, MyHome, Auto loan, Business loans etc) and variety of Credit card products.
Ahli Bank introduced the first ATM‐chip debit card, equipped with the smart card technology also
known as Chip and PIN in July 2009. The new debit cards offer customers a much higher level of
security against fraud as well as quicker transaction times.
In March 2009, Ahli Bank announced the enhanced MyHassad Savings Scheme offering bigger
rewards to customers.
Ahli Bank has launched MyE‐Bank, an internet banking service which can be accessed from
anywhere in the world, at any time and at no extra cost to customers. Simultaneously the SMS
banking service was launched making ‘Push’ and ‘Pull’ transactions even easier for customers.
In October, 2009, Ahli Bank implemented Fast Track, the Retail Lending Tracking System in an
effort to improve the bank’s efficiency in processing and sanctioning loans to its customers.
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The Bank has 12 Branches in Oman and planning to increase the branches to around 20‐25 in the
next 3 years.
Commercial Banking
The Commercial Banking has two units Corporate Banking and Small and medium enterprises
banking. The Corporate banking mainly caters to Manufacturing, Energy & Utility, General Trading,
Real Estate Contracting, Tourism & Transport and others.SME Banking caters to the small and
medium enterprises. As a recently converted commercial bank, the bank with strategic alliance with
Ahli United Bank is able to undertake high value deals and cross border transactions. The products
offered include Working capital financing, Project Financing; Trade Finance; Forex Services; Advisory
Services. It has a fully fledged dealing room and experienced Trade finance processing team.
Business Plan and strategy
Ahli Bank will continue with its business model of managing the asset growth with prudent risk
management approach and position itself as a leading commercial bank in the Sultanate of Oman.
The Bank plans to achieve a sustained growth based on solid capitalized, funding and asset
diversification. The Bank will try to maximize shareholder value by ensuring competitiveness in
terms of ability to service clients’ needs and through innovative capital structuring within regulatory
guidelines
The broad funding strategy of the Bank is to prudently raise funds in a cost effective manner on the
basis of business requirements within acceptable regulatory framework.
The Bank seeks to diversify its funding sources and reduce dependence on institutional deposits
progressively while adhering to regulatory requirements on the maturities.
To augment long term deposits the Bank has to launch new customer centric liability products so as
to gather more retail deposits. In order to garner long term and stable deposits, the Bank will focus
also on Corporate & SME teams to open current accounts and call deposits. The Bank will reduce
dependency on institutional funding with the aim to reduce concentration. Supplementary funding
other than deposits, will be through medium term loan, certificate of deposits, retained profits, re‐
launch of special deposit schemes with additional features.
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SECTION 13
CORPORATE GOVERNANCE, BOARD OF DIRECTORS AND MANAGEMENT TEAM
This section summarises the Company's corporate structure effective as at the date of this
Prospectus and the Articles of Association. The description provided hereafter is only a summary and
does not purport to give a complete overview of the Articles, nor of relevant provisions of Omani law
or the CMA circulars; neither should it be considered as legal advice regarding these matters. A copy
of the Articles of Ahli Bank is available from the registered office of Ahli Bank.
Corporate Governance
The CMA framed a “Code of Corporate Governance for MSM listed companies”, (hereinafter
referred to as the “Code”) issued vide CMA Circular No.11/2002 dated June 3, 2002 and its
amendment Circular / Decision 001/2003 dated January 11, 2003. The CMA Code is comprehensive
in its coverage of the principles of Corporate Governance that have to be adopted by “publicly listed
companies and mutual funds organized as public companies” (Article 2 of the Code). Since the Bank
is a publicly listed company, the Code applies to it.
CBO also issued a circular, “Corporate Governance of Banking and Financial Institutions” (Circular
BM/932 dated February 4, 2002) which applies to Banks.
The Bank has affirmed its commitment to comprehensively adopting and implementing the above
regulatory requirements in its functioning.
Corporate governance practice embodies the dual goals of protecting the interests of all
stakeholders while respecting the duty of the board and senior management to oversee the affairs
of a bank, ensure accountability, inculcate integrity and promote long‐term growth and
profitability. With an excellent Board of Directors details of whom are given below and the
institution of all recommended sub committees, the Bank is already compliant with all statutory
requirements.
Ahli Bank’s corporate governance philosophy is based on the following principles:
1. Satisfy the spirit of the law and not just the letter of the law
2. Be transparent and maintain a high degree of disclosure levels
3. Communicate externally, in a truthful manner, about how the Bank is run internally
4. Have a simple and transparent corporate structure driven solely by business needs
5. Management is the trustee of the shareholders’ capital and not the owner
At the core of corporate governance practice is the Board, which oversees how the management
serves and protects the long‐term interests of all the stakeholders of the bank. In compliance with
Prospectus: Ahli Bank Bond Issue
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the regulatory requirements and as per the best International practice, four board level sub‐
committees have been set up to ensure effective functioning of the Board.
The Corporate Governance Structure of the Ahli Bank SAOG is depicted below:
Disclosure and stakeholder education are core concerns which are addressed by constant
information flow and updation of knowledge bases. Ahli Bank SAOG publishes quarterly accounts
which are uploaded on the Muscat Securities Market (MSM) website, and when published also
makes these available on its website www.ahlibank‐oman.com.
All annual reports include a comprehensive management report. Management makes regular
presentations to analysts, the press and investors. These briefings outline the Bank’s performance,
and strategy on future prospects.
Board of Directors
The Bank is managed by a Board of Directors comprising 11 members elected by the annual general
meeting. The members of the Board of Directors are elected from amongst the shareholders of the
Bank or from amongst others, provided the candidate, if a shareholder, holds a minimum of 500
shares in the Bank which he may not dispose of to the extent that he shall be deprived of his status
as a shareholder in the Bank through the term of his office.
A minimum of one third of the Board Members must be independent directors. That is to say, such
directors or any of their first degree relatives should not have occupied any senior post (such as that
of a Chief Executive Officer, General Manager or similar posts in accordance with the Bank's
organisational structure) over the last two years. Additionally such independent Board Members
should not have had any relations with the Bank, its parent company or its affiliated or sister
companies resulting in financial transactions with such companies.
Subject to Article 95 of Commercial Companies Law No. 4/74 and its amendments, and without
prejudice to the Articles of Association, nominees to the membership of the Board must:
(a) be of good conduct and sound reputation;
Board of Directors
Audit Committee Executive & Credit Committee
Executive Risk Committee
Compensation Committee
Prospectus: Ahli Bank Bond Issue
55
(b) not be unable to settle his indebtedness to the Bank when he submits his application for
nomination;
(c) not be declared insolvent or bankrupt unless the state of insolvency or bankruptcy has
ceased pursuant to the laws of Oman;
(d) not be convicted of a felony or a dishonorable crime unless he has been rehabilitated;
(e) not be a member or represent a juristic person, on the boards of more than four public joint
stock companies based in the Sultanate of Oman or be a chairman of more than two of
these companies;
(f) be authorised to nominate himself to the membership of the Board of Directors by the
juristic person if he is nominated by a juristic entity;
(g) not be a member of the board of directors of a public or closed joint stock company which is
based in the Sultanate of Oman and which is carrying on commercial activities similar to
those of the Bank;
(h) present an acknowledgement which contains a statement of the number of his shares, if he
is a shareholder, with an undertaking that he will not dispose of such shares to the extent
that he shall cease to be a shareholder in the Bank, throughout the term of his office.
The directors shall be elected to the Bank's Board of Directors by direct secret ballot by the
shareholders of the Bank. Each Shareholder shall have a number of votes equal to that of the shares
held by him. A shareholder shall have the right to use the entirety of his votes in support of one
nominee or divide his shares among other nominees of his choice through the voting card. The total
number of votes cast by a shareholder in support of nominees standing for election to the Bank's
Board of Directors may not exceed the number of shares owned by such shareholder.
The membership of those elected in violation of the previous provisions shall be null and void with
effect from the date of their election. The Bank's Board must call a general meeting to elect another
member within a maximum period of one month from being aware of the nullity. The Bank shall
have the right to claim damages, resulting from this violation, from the said member or anyone who
took part in facilitating his participation in the elections.
The term of office of a member of the Board of Directors shall be three years and upon completion
of such term, the member shall be eligible to be re‐elected for a further period or periods of a
similar duration. The current term of the Board of Directors expires in March 2011.
The Board of Directors shall have the widest authority in carrying out all work required by the
Bank's management to achieve the Bank's objectives and implementing the resolutions of the
general meeting. Such authority shall be unrestricted except by stipulations made by law and
Prospectus: Ahli Bank Bond Issue
56
regulations adopted in the Sultanate of Oman or by the Bank's regulations or by decisions issued by
general meetings of the Bank.
The Board of Directors shall have full authority to perform all acts required for the management of
the Bank in course of achieving its objectives and implementing the resolutions of the general
meeting. It includes the following:
i) Approving the Bank's commercial and financial policies together with its estimated budget
with a view to achieving the objectives of the Bank and to maintain and promote the rights
of its shareholders.
ii) Developing, reviewing and updating necessary business plans from time to time in order to
put into operation the Bank's objectives and for carrying out the Bank's commercial
activities in the light of the Bank's objectives for which it has been incorporated.
iii) Adopting the Bank's disclosure measures and to follow up the implementation thereof in
accordance with the disclosure rules and guidelines issued by the Capital Market Authority;
iv) Supervising the performance of the executive management and to ensure that the Bank's
business proceeds in a manner which achieves the Bank's objectives in the light of the
objectives for which the Bank has been established;
v) Providing accurate information to the Bank's shareholders on the dates specified by the
Capital Market Authority by its disclosure rules and guidelines;
vi) Appointment of the Chief Executive Officer or the General Manager of the Bank provided
that neither of them shall be the Chairman of the Board of Directors. Also, to appoint staff
who shall work with any of the Chief Executive Officer and/or the General Manager
pursuant to the Bank's organisational structure and to specify their rights, responsibilities,
obligations and duties;
vii) Appraising the performance of the Bank's employees referred to above and to assess the
work carried out by the committees formed by the Board pursuant to article 102 of the
Commercial Companies law;
viii) Approving the financial statements related to the Bank's business and work results as
submitted by the executive management to the Bank's Board quarterly, which should reflect
the exact financial position of the Bank;
ix) Including in the annual report presented to the Shareholders General Meeting the reasons,
which justify the ability of the Bank to pursue its specified activities for the achievement of
its objectives;
x) Appointing a secretary to the Board in its first meeting and to hold four meetings per annum
provided that a maximum period of four months should not lapse between any two
consecutive Board meetings;
Prospectus: Ahli Bank Bond Issue
57
xi) Appointing the Managing Director or the Executive Director, should such posts exist,
provided that the said persons should be committed to the Bank's work on a fulltime basis;
xii) Including in the financial statements a full statement of all amounts which a director may
have received during the course of each financial year including monies paid to directors in
their capacity as employees of the Bank.
The Board of Directors shall not be permitted to carry out the following unless authorised to do so
by the ordinary general meeting:
i) Make gifts or donations except for ordinary gifts of minimal value required in the ordinary
course of business.
ii) Sell all or an important part of the Bank’s assets.
iii) Use the assets of the Bank as collateral except to guarantee its debts arising in the normal
course of its business in order to achieve the objectives of the Bank.
iv) Guarantee the debts of others apart from guarantees contracted in the course of normal
business in order to achieve the objectives of the Bank and guarantees relating to its Bank's
and subsidiaries against others.
The Bank’s Board of Directors consists of the following:
S. No. Name of Director Position Type of Directorship
1. H.E. Sayyid Khalid Hamad Hamood Al Busaidi
Chairman Independent
2. Hamdan Ali Nasser Al Hinai First Deputy Chairman Independent/ Representing MOD Pension Fund
3. Hamad Abdulmohsen H.D. Al Marzouq
Second Deputy Chairman
Independent/ Representing Ahli United Bank
4. Munir Abdulnabi Yousef Makki
Director Independent
5. Hassan Ehsan Naseeb Director Independent
6. Usama Mohammed Al Barwani Director Independent / Representing MB Holding
7. Adel Mohamed Abdelshafe El‐Labban
Director Independent
8. Sanjeev Baijal Director Independent
9. Keith Henry Gale Director Independent
10. Mustafa Shafqat Anwar Director (from March 2010)
Independent
11. Safana Al Barwani Director (from June 2010)
Independent / Representing Al Murjan Investment and
Services Co
All members of the Board are non‐executive directors.
Prospectus: Ahli Bank Bond Issue
58
Brief Profile of Directors are given below:
1‐Sayyid Khalid Hamad Hamood Al Busaidi – Chairman
Chairman:
• Sabco LLC • Oman Expo LLC • Amouage LLC • Oman Perfumery LLC
• Sabco Catering • Al Hail Investments LLC • Sabco Arts LLC
• Faisal Mo`ad Trading and Contracting LLC • Sabco Media SAOC
• Horizon Technologies FZE • Horizon Technologies SAOC
• Oman Shapoorji Construction Company LLC
Director: National Mineral Water Co. SAOG
2‐Hamdan Ali Nasser Al Hinai – First Deputy Chairman
Director:
• Contracts and Legal Affairs, Ministry of Defence
Former Director:
• Planning, Ministry of Regional Municipalities and Environment
3‐Hamad Abdulmohsen H.D. Al Marzouq ‐ Second Deputy Chairman
Chairman and Managing Director: • Ahli United Bank, Kuwait
Deputy Chairman:
• Ahli United Bank, Bahrain • Ahli United Bank (UK) PLC
• Ahli United Bank, Egypt • Ahli Bank, Qatar
Board Member:
• Commercial Bank of Iraq • Kuwait Banking Association
• Kuwait & Middle East Financial Investment Co, Kuwait
• Union of Arab Banks
• Institute of Banking Studies, Kuwait
• The Public Authority for Applied Education & Training, Kuwait
Member of the Board of Trustees: • The Arab Academy of Banking & Financial Sciences, Kuwait
4‐ Munir Abdulnabi Yousef Makki ‐ Director
Managing Director and President: • The Financial Corporation (FINCORP) SAOG
Director:
• Al Maha Petroleum Marketing Co. SAOG
• Qatar Oman Investment Company – Qatar
Chairman:
• Advent United LLC
Prospectus: Ahli Bank Bond Issue
59
• Member of the Council of Higher Education
• Member of Omani Moroccan Businessmen Council – OCCI
• Member of Omani Indian Businessmen Council – OCCI
• Member of Economic Committee – OCCI
Former Ambassador of Oman to France
5‐ Hassan Ehsan Naseeb – Director
Vice Chairman:
• Global Financial Investments
• Oman Hotels and Tourism
Director:
• Oman Holdings International Co. SAOG
6‐Usama Mohammed Al Barwani ‐ Director
Chairman:
• Flexible Industrial Packages Co. SAOG
Director:
• Taageer Finance Co. SAOG
• Oman Medical Projects Company SAOG
7‐ Adel Mohamed Abdelshafe El‐Labban ‐ Director
Group CEO and Managing Director: • Ahli United Bank, Bahrain
Board Member:
• Ahli United Bank (UK) PLC
• Ahli United Bank, Kuwait
• Ahli Bank, Qatar • Bahrain Stock Exchange
• Kuwait & Middle East Financial Investment Co, Kuwait
• Ahli United Bank, Egypt
Director: • Board of Trustees – Bankers Society of Bahrain, Bahrain
8‐Sanjeev Baijal – Director
Deputy Group CEO: • Finance and Strategic Development, Ahli United Bank, Bahrain.
Deputy Chairman:
• Legal and General Gulf BSC (C)
• Legal and General Gulf Takaful BSC (C)
Director:
• Ahli United Bank, Kuwait
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60
• AUB Investments (Cyprus) Ltd.
9‐ Keith Henry Gale – Director
Deputy Group CEO:
• Risk, Legal and Compliance, Ahli United Bank, Bahrain
Director:
• AUB Investments ( Cyprus) Ltd
10‐Mustafa Shafqat Anwar‐ Director
Deputy Group CEO: • Operations and Technology, Ahli United Bank, Bahrain
11‐Safana Al Barwani‐ Director
Director:
• MB Holding Company
• MB Petroleum Services LLC
• Crest Petroleum
• Musstir LLC
Management
Overview
The respective roles and responsibilities of the management bodies of Ahli Bank are in large part
governed by the provisions of the Commercial Companies Law, the Articles and by the Code and
circulars issued by the CMA in respect thereof.
The management of strategic issues of Ahli Bank is entrusted to the Board of Directors. The Board
may perform all acts necessary or useful for achieving the corporate purposes of the corporate
entity, with the exception of those acts that are by law or the Articles explicitly reserved for the
shareholders.
The day‐to‐day management of Ahli Bank is performed by the management team.
Senior Management Team
1‐Abdul Aziz Mohammed Al Balushi: CEO
Former Deputy Chief Executive Officer – National Bank of Oman
10 years of banking experience in various positions in National Bank of Oman
12 years of banking experience in various positions in Oman International Bank
Prospectus: Ahli Bank Bond Issue
61
Former Board Member and Chairman of the Audit Committee in Oman National Investment Corporation Holding S.A.O.G (ONIC)
Former Member of the Board and Chairman of the Audit Committee of Al Ahli Insurance
Former Member of the Board and Chairman of the Audit Committee of National Life Insurance
Former Director, Oman Investment and Finance Co. Ltd. S.A.O.G (OIFC)
Former Director, Gulf Hotel (Oman) Co. Ltd.
Former Advisory Member in College of Agricultural and Marine Sciences at Sultan Qaboos University
Advisory Board Member “The British Scholarships of Oman” A local organization that sponsors outstanding Omanis for Post Graduate Studies in the UK
2‐Chandrashekhar Chetty: DCEO – Support Services
Former COO, Global Retail & Commercial Bank Barclays Bank PLC –Mumbai, India
Former COO, Calyon Bank –Mumbai, India
Former COO, Dresdner Bank Group, India
3‐CB Ganesh: DCEO‐ Commercial Banking and Treasury
Former Head of Trade Finance – ICICI Bank Ltd, India
Former Dy. Chief Executive & Head of Wholesale Banking – North Asia, ICICI Bank Ltd
Former Regional Head, Corporate Banking, South India– ICICI Bank Ltd, India
4‐ Ashish Sood: DCEO‐ Retail and Private Banking
Former Head of Consumer Banking, Standard Chartered Bank, Jordan
14 years of banking experience in various positions and geographies in Standard Chartered Bank including:
General Manager, Lending, Northern Gulf and Levant based in Bahrain
General Manager, Credit Cards and Personal Loans, Bahrain
Head of Sales, Credit Cards, Standard Chartered Bank, UAE
Prospectus: Ahli Bank Bond Issue
62
SECTION 14
SUBSCRIPTION CONDITIONS AND PROCEDURES
Eligibility for the subscription of Bonds offered
The subscription to 35,000,000 (Thirty Five million) Bonds offered shall be open to Omani and Non‐Omani individuals and Juristic Persons.
Details of Proposed Investors
Sl. Name of the Investor Undertaking amount Proposed Allotment
Million Bonds Million Bonds
1 Public Authority for Social Insurance (PASI) 6.000 3.850
2 MoD PF (10%) 3.500 2.250
3 Oman Fisheries 1.000 0.640
4 Vision Insurance 0.400 0.260
5 National Life & General Insurance 0.500 0.320
6 Dr. Abdulla Abbas 0.500 0.320
7 Rashid Al Rajhi 2.000 1.280
8 The Financial Corporation Co. SAOG (FINCORP) 3.000 1.930
9 Port Services Corporation 3.000 1.930
10 Oman Arab Bank SAOC 1.500 0.960
11 Abdul Kader Ahmed Askalan 0.300 0.200
12 Oman Qatar Insurance 0.400 0.260
13 Oman Investment Fund 5.000 3.210
14 Oman Re‐insurance 0.500 0.320
15 Ahli United Bank Money Market Fund 0.500 0.320
16 Oman LNG 0.575 0.370
17 Bank Muscat –Staff Saving 0.500 0.320
18 Civil Service Pension Fund 10.000 6.420
19 Engr. Mohsin Mohammed Al Sheikh 0.300 0.200
20 Diwan of Royal Court Pension Fund 3.000 1.930
21 Malallah Ali Mohammed Al Lawati 12.000 7.710
Total 54.475 35.000
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63
Prohibitions with regard to the Applications for subscription
The subscribers to the Bonds issued as mentioned hereunder shall not be permitted to participate
in the subscription:
1. Sole Proprietorship Establishments: Whereas, an owner of a sole proprietorship establishment
would be required to subscribe in his name only if he so desires.
2. Trust Accounts: Brokerage companies are required to lodge applications for subscriptions for
Bonds, which are made on behalf of their “Trust Account” clients in the personal names of their
clients.
3. Multiple Applications for the subscription: A person is not permitted to submit more than one
application for subscription in his personal name.
4. Applications made in joint names (including the applications made in the name of legal heirs).
All applications made that violate the above prohibitions shall be rejected without further reference
to the applicant.
Shareholder’s (Investor’s) Number with Muscat Clearing and Depository Company
1. Any person who desires to subscribe to the Issue must have an investor account with MCDC as
per its working form, which may be obtained from the MCDC Head Office or its site on the
World Wide Web or from brokerage companies. Each subscriber may open this account through
the following outlets:
Head Office of MCDC based in the Ground Floor of the building of the Capital Market
Authority, Commercial Business District
Branch of MSM based in Salalah
Office of the Brokerage Companies that are licensed by MSM
By fax No. 24817491
By opening an account through the MCDC website at www.csdoman.co.om
2. With regard to the investors who presently hold accounts with MCDC, all investors shall be
required, before the subscription, to confirm whether their accounts contain their basic
particulars totally, that being the name in full, postal address, Civil Status No., as mentioned in
the Personal Card (Civil) or Civil No., furnished in the Passport or Civil No., as provided for in the
new Birth Certificate and details of the Bank Account. Every Bondholder may update his
particulars through the outlets mentioned above.
3. All correspondence including notices and cheques shall be sent to the subscriber at the address
recorded at MCDC. Therefore, all subscribers shall verify the correctness of such addresses.
Prospectus: Ahli Bank Bond Issue
64
4. Each subscriber shall be required, after opening of the Account or updating of his particulars, to
secure from MCDC, the right number so as to have it registered in the Application for the
subscription. The investor himself shall be responsible for verification of the number furnished
in the Application for the subscription. The applications not bearing the correct Account
Numbers shall be rejected without contacting the subscriber.
For more information on these Procedures, please contact:
Muscat Clearing and Depository Company SAOC
Tel. 24814827 ‐ Fax. 24817491
http://www.csdoman.co.om/
Subscription Period
Subscription for the Issue shall start on the December 12, 2010 and shall close on the December 15,
2010 (both days inclusive).
Minimum and Maximum Application Size
The minimum number of Bonds for subscription will be 100,000 and in multiples of 1000 Bonds
thereafter. There is no maximum limit.
Particulars of the Bank Account
1) Each subscriber shall be required to furnish the particulars of his Bank Account (Registered in
the name of the Applicant). The subscriber shall not use the Bank Account Number of any other
person except in case of minor children only.
2) If the Bank Account of the subscriber is registered with a bank other than the one receiving the
subscription, he shall be required to submit a document in evidence of correctness of the Bank
Account Particulars as provided for in the Application. This can be done by submitting any
document from the Bank of the subscriber furnishing therein Number and Name of the
Account Holder like the upper Portion of the Account Statement issued by the Bank containing
these particulars only or a letter or any document issued by the said Bank containing the said
information. The subscriber shall ensure that the evidence submitted is readable in a clear
manner, containing Number and Full Name of the Account Holder. As additional clarification, it
is made known that the subscriber is not obliged to submit the evidence with regard to
correctness of his Bank Account if he is subscribing through the bank wherein he is maintaining
his account. In this case, the bank shall be required to verify and confirm the correctness of the
subscriber’s Account through its specific System and Procedure or through the evidence
submitted to it by the subscriber.
3) In accordance with the instructions issued by the CMA, the particulars of the Bank Account
referred to above shall be recorded in the Registers of MCDC and this account shall be used in
Prospectus: Ahli Bank Bond Issue
65
the transfer of the excess funds of the subscription and distribution of the interest payable to
the Bondholder available with the MCDC. Whereas, with regard to the subscribers who have
their Bank Accounts registered presently with the Registers of MCDC, the Bank Account Number
provided for in the Application for the subscription would be utilized only for the purpose of
transfer of the excess sums.
4) The Application for subscription containing the Bank Account Number of a person other than
the subscriber shall be rejected, with the exception of the applications made on behalf of minor
children that contain Bank Accounts particulars of their fathers.
Documentation Required
1) Submission of a document confirming correctness of the Bank Account Number as provided for
in the application for subscription in one case only that is being subscription through a bank
other than the one with whom the subscriber has his account.
2) Copy of a valid Power of Attorney duly endorsed by the competent legal authorities in the event
the subscription is on behalf of another person (with the exception of the subscription made by
a father on behalf of his minor children).
3) In case of applications by non‐individuals, which are signed by a person in his/her capacity as an
authorized signatory, a copy of adequate and valid documentation should be attached.
Mode of subscription
1) The subscriber shall be responsible for furnishing all his particulars, ensuring correctness and
validity of the information provided for in the application. While emphasizing on it, the Banks
receiving the subscription have been instructed to accept the applications for subscription that
comply with all the requirements as provided for in the Application for subscription and
Prospectus.
2) The subscriber shall be required, before filling the Application Form for subscription, to peruse
the Prospectus and read the conditions and procedures governing the subscription with total
care and importance.
3) The subscriber shall be required to fill in the Application for the subscription and furnish all his
particulars including the Shareholder Number available with MCDC, Civil Number/Passport
Number and date of birth in case of minor children.
4) The subscriber shall be required to submit the application to the Collecting Bank along with the
payment towards the Bonds and also ensure that the documents in support of the information
furnished referred to above are enclosed.
5) In case of payment of the value of the subscription by Cheque/Demand Draft, it shall be in
favour of “Ahli Bank Bonds”.
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66
Banks receiving the subscription
The applications for subscription shall be accepted by one of the following commercial bank (“the
Collecting Bank”) during the official working hours only:
1. Ahli Bank SAOG
The Bank receiving the subscription shall be required to accept the application for subscription after
confirmation of compliance of the procedure and subject matter in line with the requirements as
provided for in the Prospectus. Hence, the Bank must instruct the subscribers to comply and fulfill
any requirement that may appear in the application submitted.
The subscriber shall be responsible for submission of his application for subscription to one of the
Banks receiving the subscription before closing of the period for subscription. In this regard, the
Bank shall have the right not to accept any application for subscription that reaches it after the
official working hours on closing date of the period for subscription.
Acceptance of the Applications for subscription
The Bank receiving the subscription shall neither receive nor accept the Applications for
subscription under the following circumstances:
1) If the Application for subscription does not bear the signature of the Applicant.
2) In case of failure to pay the value of the Bonds subscribed in accordance with the conditions
provided for in the Prospectus.
3) If the value of the Bonds subscribed is paid through Cheque and if the same is dishonored
for whatever reason.
4) If the Application for subscription is not bearing the MSM No., available with MCDC.
5) If the MSM Number furnished in the Application for subscription is noted to be incorrect.
6) If the subscriber submits more than one application in the same name, all of them shall be
rejected.
7) If the Supporting Documents referred to in the Prospectus are not enclosed with the
Application for subscription.
8) If the Application does not contain all the particulars of the Bank Account of the Applicant.
9) If all the particulars of the Bank Account held by the Applicant as provided for in the
Application are noted to be incorrect.
10) If the particulars of the Bank Account provided for in the Application are found to be not
relevant to the Applicant, with the exception of the applications submitted in the name of
Prospectus: Ahli Bank Bond Issue
67
Minor Children, who are allowed to make use of the particulars of the Bank Accounts held
by their fathers.
11) In case of failure to have the Powers of Attorney attached with the Application as provided
for in the Prospectus in respect of the Person who subscribes and (sign) on behalf of
another Person (with the exception of the fathers who subscribe on behalf of their Minor
Children).
12) If the Application has not complied with the legal and organizational requirements as
provided for in the Prospectus.
If the Bank observes, after receipt of the application and before expiry of the time schedule
prescribed for handing over of the applications in a final manner to the Issue Manager, that the
application has not complied with the legal requirements as provided for in the Prospectus, due
effort would be taken for contacting the Applicant so as to correct the mistake detected. In case of
failure to have the mistake corrected within the period referred to, the Bank receiving the
subscription shall be required to return the application for the subscription together with the
subscription value before expiry of the period specified for handing over of the applications to the
Issue Manager.
Refusal of subscription Applications
The Issue Manager may reject the subscription Applications under any of the conditions referred to
above, after securing the approval of the CMA and submission of a comprehensive report furnishing
the details of the subscription Applications that are required to be rejected and reasons behind
such rejection.
Enquiry & Complaints
The subscribers who intend to seek clarification or file complaints with regard to the issues related
to the allotment or rejected applications or refund of the funds in excess of the subscription may
contact the Branch of the Bank where the subscription was made. In case of absence of any
response from the Branch, the subscriber may contact the person concerned as hereunder:
Bank Person in
Charge
Postal
Address
Phone
No.
Fax No. Email
Ahli Bank SAOG Sriram
Balakrishnan
P.O. Box 545,
PC 116,
Sultanate of
Oman
24577000 24568001 Sriram.Bala@ahlibank‐
oman.com
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68
Allotment Letters and Refund of Money
The Bank will make efforts to complete the allotment of Bonds within fifteen Business Days from
the date on which the Issue closes for subscription, subject to the approval of all relevant
authorities. The Registrar of the Bonds shall maintain a register setting out the names and
addresses of the Bondholders to send the allotment advices. The allotment advice will contain the
name and address of the Bondholder, face value of the Bond, number of Bonds allotted, the total
value of Bonds allotted and folio number as recorded with the Registrar. No physical certificates will
be issued for the Bonds allotted.
Proposed Timetable
Procedure Date
Commencement of subscription December 12, 2010
Closing of subscription December 15, 2010
Due date for the Issue Manager to receive the subscription data and final registers of the subscribers from the bank (Allotment Date)
December 16, 2010
Notifying the CMA of the outcome of the subscription and proposal with regard to the allotment
December 18, 2010
Approval of the CMA with regard to the proposal for the allotment December 19, 2010
Commencement of refund and dispatch of the notices regarding allotment
December 20, 2010
Listing of the Bonds on the MSM December 22, 2010
Listing & Trading of the Bonds of the Issuer
The Bonds of the Bank shall be listed with MSM in accordance with the Laws and Procedures that
are in force on the date application is made for the listing and registration.
Responsibilities & Obligations
The Issue Manager, the Collecting Bank and the MCDC shall abide by the responsibilities and duties
specified under the Regulations issued by the CMA and shall comply with by any other
responsibilities and obligations set out in the agreements entered into between them and the
issuer. The parties concerned shall be required to take remedial measures with regard to the
damages arising from any negligence committed in the performance of the functions and
responsibilities assigned to them. In such event the Issue Manager shall liaise with relevant
authorities such as CMA and MSM for taking suitable steps and measures for repairing such
damages.
Prospectus: Ahli Bank Bond Issue
69
SECTION 15
UNDERTAKINGS
Issuing Company: Ahli Bank SAOG
The Board of Directors of Ahli Bank SAOG confirm that:
1. All the information provided in this Prospectus are complete, correct and sound and
reasonable care has been taken so as to avoid omission of any important facts or
information that would have made the expressions in the Prospectus misleading
2. Investors to the private placement are informed of all information that are required to make
their investment decision on whether to subscribe to the Company’s Bonds.
3. They will abide by all the provisions set out in the Capital Market Law, Commercial
Companies Law, Rules and Regulations issued pursuant to them
Signed on behalf of the Board of Directors:
S. No. Name Designation Signature
1 Mr. Hamdan Ali Nasser Al Hinai First Deputy Chairman
2 Mr. Hassan Ehsan Naseeb Director
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70
Issue Manager: The Financial Corporation Company SAOG
In accordance with the responsibilities assigned to us pursuant to the Provisions laid down in Article
3 of the Capital Market Law, Executive Regulations and Instructions issued by the Capital Market
Authority, we have reviewed all the relevant documents and other material required for the
preparation of the Prospectus pertaining to the Issue of Bonds of Ahli Bank SAOG.
The Board of Directors of Ahli Bank SAOG shall bear the responsibility with regard to correctness of
the information provided for in the Prospectus, and they have confirmed not to have deleted any
material information from it, omission of which would have made the Prospectus misleading.
We confirm that we have taken due care as required by the profession with regard to the
Prospectus that has been prepared under our supervision. On the basis of the review works
referred to above and discussion with the issuer of the securities represented by the Issuer
Company, its directors/founders, officers and other related parties and on the basis of the review
carried out by us with these authorities concerned with regard to the subject matter of the Issue
and contents of the documents submitted to us, we confirm the following:
1) We have taken necessary and reasonable care in ensuring that the information furnished to
us by Ahli Bank SAOG and that contained in the Prospectus are consistent with the facts
available in the documents, material and other documents pertaining to the Issue.
2) On the basis of our perusal and information made available to us by the Issuer , it is hereby
confirmed that the Issuer has neither concealed any fundamental information nor omitted
any important information omission of which would have made the Prospectus misleading.
3) The Prospectus and the private placement to which it relates are consistent with all the
rules and conditions governing the transparency as provided for in the Capital Market Law
as amended, the Executive Regulations of the Capital Market Law and applicable Specimen
Prospectus available with the Authority. Also noted to be in conformity with the
Commercial Companies Law as amended and the directives and decisions issued in this
regard.
Prospectus: Ahli Bank Bond Issue
71
4) The data and information which have been presented in the Prospectus in Arabic (with its
unofficial translation in English) are correct, reasonable and adequate as per our perusal so
as to assist the investor in taking an appropriate decision whether or not to invest in the
Bonds offered in accordance with the rules and conditions governing the transparency.
Issue Manager
The Financial Corporation Co. SAOG
Prospectus: Ahli Bank Bond Issue
72
III. Legal Advisor: Said Al Shahry Law Office
The Legal Advisor, whose name appears below, hereby confirms that all the non‐financial
particulars and information set out in the Prospectus are consistent and in conformity with the
laws and regulations of Oman relevant to the activity of the Issuer, the Commercial Companies
Law, the Capital Market Law and their implementing regulations and directives, the
requirement and rules for the issue of bonds issued by the CMA and the Articles of Association
of the Issuer and the resolutions of the general meeting of the Issuer. The Issuer has secured all
the licences and official approvals that are required to engage in the activities which are the
subject matter of the Prospectus.
Legal Advisor
Said Al Shahry Law Office