Thursday, May 30, 2013

Impetus to Omanisation in Banking

The Central Bank of Oman (“CBO”) recently issued Circular no. BM 1105 dated 31 March 2013 (“2013 Circular”) which grants further clarity and impetus to Omanisation in the banking sector.

With the overall Omanisation requirement of 90%, the banking sector is one of the highest localized sectors in Oman.  According to recent statistics issued by the CBO, most banks in the Sultanate have achieved an overall Omanisation ratio of over 92.5%.

2013 Circular

The 2013 Circular states that all banks should strive to reach an overall Omanisation level of higher than 90% - without any formal target being set by the CBO.  Hence, no specific target has been set for overall Omanisation in banking.  In comparison, the CBO’s Circular no. 762 dated 4 July 1995 (“1995 Circular”) stipulated that the overall Omanisation target should be 90% by the end of December 2000.

What the 2013 Circular does aim to achieve is:

  • specifying Omanisation targets for senior and middle management cadres; and
  • granting certain exemptions to foreign banks and Islamic banks.
Under the 1995 Circular, specific Omanisation targets (which were to be achieved by December 2000) were given to (a) top and middle management – 75%, (b) clerical cadre – 95% and (c) non-clerical cadre – 100%.

The 2013 Circular uses the terms ‘senior and middle management’ as opposed to the terms ‘top and middle management’.  It further elaborates on the positions that will be considered as senior and middle management. Positions such as Assistant General Managers, management reporting to CEO and Heads of Core Departments will be considered as senior management.  Middle management will consist of others in the management cadre.

Just as the 1995 Circular, the 2013 Circular specifies sub-targets.  The only difference is that the targets set out in the 2013 Circular are focused towards giving upward momentum to the Omanis working/wanting to be in the banking sector.

The 2013 Circular states that banks should achieve 65% Omanisation in the senior management cadre by December 2015 and 75% by December 2016 (with plans to raise it to 90% by December 2018).  The middle management cadre should achieve 90% Omanisation by December 2016.   The clerical cadre will have 100% by 2013 and non-clerical cadre will continue to have 100% Omanisation.

In addition to the information provided by the banks in their quarterly reports to CBO, from June 2013 the banks will have to provide a list of identified senior management positions.


The 2013 Circular also grants following exemptions:
  • All foreign banks may exempt their CEOs/ Country Managers from the Omanisation requirement.
  • Foreign banks with only one branch shall have the option of having three non-Omani staff.  The prior requirement of having more than 20 staff has been repealed.
  • Islamic banks will be allowed to be treated separately and will get four years from commencement of their businesses for compliance with the overall ratio of 90% and specified sub-targets – subject to having at least 65% overall ratio.
Apart from encouraging foreign and Islamic banks, the 2013 Circular reaffirms the Government’s decision to increase Omanisation and ensures that more and more Omanis see a career path in banking and are groomed to assume responsibilities as senior and mid-level managers.