11th Nov 2009 10:52
Title- BankMuscat's investment in Silkbank (formerly Saudi Pak Commercial Bank), Pakistan
The Bank would like to advise investors that Silkbank, its associate in Pakistan where it currently holds an approximate 35% stake, is planning a rights issue to raise additional capital. However, as regulatory approvals in Oman have not been forthcoming, the bank would not be in a position to invest its pro-rata share of this capital raise.
As a result of our non-participation in the rights issue, our stake in Silkbank is expected to be diluted, though the actual dilution is not known at this stage. If our stake is reduced to below 20% it is likely that the accounting of this investment could change from "associate" to "marked to market" investment. As of September 30, 2009, the holding value of this investment was RO 23.4 million, which included RO 14 million of book value and RO 9.4 million of amounts adjusted against equity on account of depreciation of the Pakistan Rupee. Against this holding value, the market value as of that date was approximately RO 8.3 million.
The bank will assess the accounting treatment of this investment in consultation with its external auditors and will account for this as required by international accounting standards. It is likely that the bank could write down a significant part of this investment of RO 23.4 million during the last quarter of 2009.
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