“We granted licences for four new banks in 2007, and we expect to have 20 banks operating in Oman in the first quarter of 2008,” says Al-Zadjali. “We think that is a good number for the market here, but we are receiving more requests. We will assess each one on its individual merits and the value it will add to the sector.”

Oman’s central bank has also raised the minimum capital requirement for local banks to RO100 million ($260m). In 2006 the minimum capital requirement stood at RO50m ($130m). The minimum capital requirement for foreign and international bank branches operating in the sultanate is RO20m ($52m).

The most recent bank to be granted approval by Oman’s central bank is the Oman Merchant Bank (OMB). It will start operating early this year following an initial public offering of 40 per cent of its capital. “There is no definite date set,” says Al-Zadjali. “Hopefully operations will commence in the first quarter of the year.”

Dubai’s Gulf Merchant Group and a private Omani national will hold the remaining shares in OMB. In March 2007, Gulf Merchant Group said it would retain a 35 per cent stake.

Omani mortgage lender, Alliance Housing Bank has recently been converted into a commercial bank and is also set to start operations soon. Qatar National Bank announced the start of operations in Muscat on 30 December 2007. Fifteen local and foreign banks had previously been operating in Oman.