BankMuscat Shareholders approve RO 238.3 million (USD 619 mn) Dubai Group proposal to take 15 percent stake in the bank

• Transaction also receives in-principle approval from regulatory authorities.
• Single largest financial services cross border investment in the region

This is the single largest cross border investment in the banking sector in the region. Dubai Group is a member of Dubai Holding.

This proposed transaction has also received 'in principle' approvals from regulatory authorities in the Sultanate of Oman. The transaction is subject to the final approval of the regulatory authorities in the Sultanate of Oman.

Speaking on the occasion, Sheikh AbdulMalik bin Abdullah Al Khalili, Chairman, BankMuscat SAOG said:

"We are extremely glad that the proposal from Dubai Financial Group has been so warmly received by both the shareholders of the Bank and the regulatory authorities in Oman. We expect this relationship to greatly lend momentum to our ambitious growth plans. BankMuscat, as I am sure you are aware, has periodically looked at innovative ways to raise capital. This time is no exception. The offer from Dubai Financial Group, we believe, will provide the most significant value to our stakeholders: not only in terms of the premiums quoted, but also in terms of synergies in cultural beliefs and the importance of long-term value creation."

Dubai Financial Group is the financial services holding company for Dubai Group. Dubai Financial Group's strategy is to own global and regional institutions for the long term and focuses on aligning itself with the management to create significant value for all stakeholders.

The highlights of the private placement are as follows:

BankMuscat will issue 161.57mn ordinary equity shares to Dubai Financial Group LLC through a private placement as per Article 83 of the Commercial Companies Law. This represents 15% of the capital of BankMuscat post the private placement.

The price of a BankMuscat share that would be issued under the above private placement would be RO 1.475 per share. The total consideration for the private placement would be RO 238.3 million.

Dubai Financial Group would nominate two directors into the Board of BankMuscat subject to the regulations of the Commercial Companies Law.

"This private placement will result in a substantial increase in the net worth of the Bank. We intend to use these funds to support the overall asset growth and expansion plans of the Bank both in the domestic market and overseas. The funds will also help us further strengthen our capital adequacy position, which will go up to 18.87%, from the current 11.4% levels," Sheikh AbdulMalik added.

The Central Bank of Oman currently requires banks to maintain a capital adequacy ratio, the ratio of a bank's capital to its risk-weighted credit exposure, to be no less than 10%.

BankMuscat has just announced a net profit of RO 40.2 million for the half year ended June 30, 2007, as against a net profit of RO 28.0 million reported during the same period in 2006, thus recording an impressive growth of 43.6%. This is the second successive quarter that the Bank has turned in a record performance. The basic earnings per share on an annualized basis works out to 88 baizas for every 100-baiza share of the Bank.