Observer & Busness 24 Jun 2012 - Oman Observer

By A Staff Reporter
MUSCAT — National Bank of
Oman (NBO) and Duqm Development
Company (DDC)
have signed a long-term loan
facility agreement to provide
funding for the development
of the Frontier Town Project
Phase I, which involves developing
a residential township
consisting of apartments, vil-
OTE launches
LG Multi V III
AC units
Page 22
las and other common amenities
for the management and
staff of Oman Drydock Company
(ODC).
The project being developed
by Duqm Development
Company is based on a long-
term commitment by Oman
Drydock Company to lease
the properties built in Phase
I. The project started in 2011,
is progressing well and is due
for completion by the end of
2012.
National Bank of Oman is
the sole arranger and provider
of this large credit facility.
DDC’s frontier town project
is the first major project to be
funded by a bank and NBO is
indeed proud to achieve this
distinction.
NBO recently hosted a
formal ceremony to mark the
Sunday, June 24, 2012
NBO gives long-term funding
to Duqm Frontier Project
NEW YORK — The euro
got a boost yesterday as four
European leaders pledged
130 billion euros ($163 billion)
to promote growth.
The euro hit $1.2571, up
around 0.3 per cent for the
day after a slump earlier. The
dollar was broadly weaker
as currencies reclaimed
some ground lost against the
greenback.
"The buck on Thursday
had rallied about one per cent
against a currency basket after
a spate of weak data from
around the globe touched off
worries about an accelerat-
BankMuscat with Salalah Festival
BANKMUSCAT, the flagship financial institution in the Sultanate,
joined the nation in celebrating the monsoon splendour and
cultural heritage of Oman as Salalah Tourism Festival got off to
a fine start in the summer capital of Oman. A large contingent of
senior BankMuscat officials attended the ceremony. Page 22
ing downturn in growth,"
said Travelex analysts.
Earlier, the leaders of
Germany, France, Italy and
Spain looked to soothe global
worries with promises to
kickstart growth in the bloc's
floundering economies.
French President Francois
Hollande said the other
leaders of Germany, Italy
and Spain agreed to mobilise
"one per cent of European
GDP, that is 120 to
130 billion euros, to support
growth" — a move Germany's
Angela Merkel hailed as
"an important signal".
"We need to work closer
together politically, especially
in the euro zone. Whoever
has a common currency must
also have coherent policies.
That is also a lesson from the
last two years," Merkel said.
Italian Prime Minister
Mario Monti said the four
leaders had agreed that
boosting growth in the euro
zone was key to restoring
confidence.
"The first objective we
agree on is to relaunch
growth, investments and to
create jobs," Monti said.
"The euro is here to stay
successful financial close of
this credit facility, at the Grand
Hyatt Muscat.
The evening was attended
by Board members and senior
management teams of NBO
and DDC. Also present at the
function were senior management
members of ODC and
Duqm Special Economic Zone
Authority and other distinguished
guests.
Euro gets bump from stimulus deal
and we all mean it. The great
project which has been successful
until now, the euro, is
irreversible," he added.
In a sign of continued discord,
however, Hollande said
there could be "no transfer of
sovereignty without greater
solidarity" within the euro
zone.
Giving up sovereignty
would be required for deeper
fiscal integration in the euro
zone, which Merkel is pushing
for, but France wants financial
burden sharing to be a
higher priority. — Agencies
Moody’s downgrade provides
edge for safe-haven banks
LONDON/NEW YORK —
Major ratings downgrades by
Moody's will further divide the
world's biggest banks based
on their strength and access to
cheap customer deposits.
The ratings, released on
Thursday by Moody's Investors
Service, gave a competitive
advantage to "safe-haven"
banks that fund themselves
with stable, low-cost customer
deposits, while worsening the
outlook for weaker banks that
rely more on capital markets
for their funding.
Stock and credit markets reacted
mildly after Moody's cut
the ratings of 15 of the world's
biggest banks, as the cuts had
been widely anticipated.
The cost of insuring against
default for each of the five biggest
US investment banks fell
on relief that Moody's was
not harsher, said Otis Casey,
research director at Markit in
New York.
The KBW index of US
bank stocks rose 1.4 per cent
on Friday in New York. European
bank shares rose 0.1
per cent. Shares of New Yorkbased
Morgan Stanley were
up 1.3 per cent after initially
jumping more than 3 per cent
in reaction to its rating having
been cut less than feared.
Aside from the immediate
market moves, the downgrades
reinforce a trend that has seen
weaker banks punished for
their risk-taking, while strong-
TOURISTS walk past a Bank of America banking centre in Times Square in
New York yesterday. — Reuters
er banks are rewarded for conservative
funding models, ensuring
lower costs and higher
margins.
Not only will funding costs
rise for the worst-rated banks,
but trading partners are bound
to ask for more collateral —
and steer business to those
perceived to be financially
stronger.
"These downgrades will increase
the cost of doing business
for banks, either through
reduced, or more costly, access
to funding or the need
to lodge extra collateral with
creditors," said Daiwa Capital
Markets analyst Michael Symonds
Moody's gave the highest
ratings to HSBC, Royal Bank
of Canada and JPMorgan,
which it said had stronger
"shock absorbers" than their
peers.
All three are regarded as
safe-haven banks, funded by
deposits from millions of retail
customers and relying less
than riskier banks on capital
markets for short-term financing.
Moody's gave the lowest
credit ratings to banks that
have been affected by problems
with their risk management
or whose capital buffers
are not as strong as those of
their rivals.
Those include Morgan
Stanley and others with few
retail deposits, as well as
banks such as Bank of America
, Citigroup and Royal Bank
of Scotland, which despite
having big deposit bases have
gotten into trouble by combining
their retail business with
riskier investment banking.
— Reuters
Ahmed Musalmi, NBO’s
Deputy Chief Executive Officer
said: “NBO is an active
player in the project financing
market in the Sultanate
and has led and participated
in a number of successful infrastructure,
power and petrochemical
projects in Oman.
We reiterate our commitment
to projects of national importance
keeping in mind the
vision and guidance of His
Majesty Sultan Qaboos. We
firmly believe that Duqm as
the emerging hub will soon be
the ideal model town displaying
His Majesty’s vision for
the nation.
We greatly value our relationship
with Duqm Development
Company and we look
forward to continuing this mutually
beneficial relationship.
On behalf of the Board of Directors
and the CEO of NBO,
I take this opportunity to thank
DDC for their confidence and
faith in the bank to structure
and deliver this facility.”
Speaking on the occasion,
Ahmed Sulaiman al Maimani,
Chairman of the Board of Directors
of DDC, added: “I take
this opportunity to express our
sincere appreciation and satisfaction
to NBO for their professionalism
and commitment
to the project. We look forward
to a long-term mutually
beneficial relationship.”
Big four agree on growth package
GERMAN Chancellor Angela Merkel resisted pressure for common
euro zone bonds or a more flexible use of Europe’s rescue
funds but agreed with leaders of France, Italy and Spain on a
130 billion euros ($156 billion) package to revive growth. The
measures are already at work in Brussels. Page 24
Huawei denies using Chinese
subsidies to grab business
ST PETERSBURG — Huawei
Technologies Co Ltd, the
world's No 2 telecom gear
maker, has denied using Chinese
subsidies to gain global
market share after it was accused
by US lawmakers and
EU officials of unfair competition.
Huawei and cross-town
rival ZTE Corp have come
under close scrutiny by US
lawmakers and the European
Commission, which say both
are able to use subsidies to bid
for contracts at lower prices
than Western competitors.
Both companies rose to
prominence rapidly over the
past few years, clinching contracts
with major telecom carriers
and sometimes edging
out European rivals Ericsson,
Alcatel Lucent SA and Nokia
Siemens Networks.
"It's not true that Huawei
uses subsidies to gain market
share," Chen Lifang, Huawei's
global board director,
said in an interview on the
sidelines of a business event
at St Petersburg in Russia.
"We receive legal subsidies.
Like European countries,
China also gives out
subsidies for R&D-related activities.
Huawei has taken part
in such European and Chinese
schemes," said Chen, a member
of Huawei's 13-person
board.
Huawei, together with the
world No 5 telecom equipment
maker ZTE, denied accepting
illegal subsidies earlier
this year, but this is the first
time a Huawei board member
has commented about the
issue. The head of the US
House of Representatives'
Intelligence Committee this
week said apart from the investigation
on subsidies, legislation
could be proposed to
deal with any related national
security threats.
In May, EU diplomats said
the trade bloc would like to
take action against Huawei
and ZTE on the grounds that
they receive illegal state subsidies
that allow them to sell
equipment at lower prices.
Analysts said Chinese telecoms
equipment makers had
also the support from policy
banks, such as China Development
Bank CHDB.UL,
which provided low interest
rate loans for network infrastructure
projects in emerging
economies.
Chen brushed off rumours
that Huawei did not need to
pay back such loans.
"Our competitors even
spread rumours that we
needn't repay these loans. This
is impossible and untrue," she
said late on Friday.
She said Huawei usually
worked with Chinese and foreign
banks in project financing
and loans, and was transparent
in the process. In 2011,
Huawei borrowed $4.6 billion
from banks, with more than 70
per cent from overseas banks
and less than 20 per cent from
Chinese lenders, Chen said.
"These banks usually
make necessary risk assessments
before agreeing to the
loans. All of such loans have
also been audited."
Huawei has been successful
in selling telecom equipment
in Europe and emerging
economies in Asia and Africa,
expanding its presence in the
mobile phone and enterprise
segments. — Reuters