An Experienced Hand
Murray Sims, CEO, National Bank of Oman speaks to Mayank Singh about his plans, the sub prime crisis and a host of other issues

As we enter the elevator at the NBO headquarters in CBD and ask for directions to the CEO’s office, we are pleasantly surprised by a gentleman who introduces himself as Murray Sims. We follow his lead and settle down in his swank office overlooking bank street. The conversation that follows has the veteran banker sharing his thoughts on a range of topics. Excerpts…

Having been in Oman earlier, has this been a kind of homecoming from you?
I worked with Standard Chartered Bank in Oman between 1994-96 and it is lovely to be back in Muscat. Incidentally, my daughter started her schooling while we were here at the British School. Things, though, have changed drastically over these years. There has been significant economic development across the region and in Oman fuelled by the rise in oil prices. A number of manufacturing operations have been set up and the process of diversification has been progressing rapidly. We were at Mumtaz Mahal restaurant a few days ago and from the terrace one could see a long line of traffic. This reflects the economic progress at the ground level.

What kind of experience have you had in banking?
I was born in the south of England on April 3, 1960 and have moved 48 times in my career. Over the years, I have worked in Brunei, South Africa, England and in the Middle East. Working across continents has given me a chance to handle a range of functions within a bank – on both the retail, operational, credit and corporate banking sides. Having started way back in 1973 NBO has the distinction of being the first local bank in the country so it has deep roots in the country and enjoys great brand equity. So, yes, it is a great pleasure to come back to Oman to work for this august institution.

Have you started working on a set of priorities for NBO?
I have decided to spend the first 90 to 100 days of my tenure understanding the dynamics of the marketplace and acquainting myself with the staff. I have been talking to my staff in order to understand their needs and expectations. Apart from that I am also trying to look at the available opportunities in the marketplace and the delivery mechanisms to address these needs better.

Rapid development has also led to more competition. Is this a concern?
The organisation does not get distracted by competition as we believe that concentrating on and enhancing our strengths is the best way to exploit market opportunities.

NBO has had its share of challenges in the past in the form of non-performing assets. What measures has the bank adopted to ensure that these problems do not recur?
The bank has put in place a robust risk assessment approach and tools to mitigate any such risk. A strong corporate governance structure and risk culture has been inculcated in the bank. A number of Board Risk Committees have been created within NBO to also oversee management. The benefits of such a framework are there for everyone to see as NBO has been posting greatly improved turnover and profits in the recent past.

What’s your roadmap for the bank in future?
A bank has to analyse its brand equity, understand the market and provide products to service such demand. Thus, providing good quality service in a market like Oman is an opportunity for most banks and it is going to be our focus area. On the business side we are looking at a 50:50 mix between retail and corporate banking. We are also investing in technology as it is important for our competitiveness. Scaling up our branch network and distribution footprint is another priority area. We see potential in SME and business finance and believe that we have a role to play in this arena. As a bank you have to ensure a balance between the quantum of finance allocated to a certain service and the return on such assets. We will look at every possibility through this prism.

Does the global sub prime crisis have any bearing on banks in Oman?
The regulatory environment in the Sultanate is very good as the Central Bank of Oman has put in place exemplary governance standards. It engages in constant dialogue with various banks, giving us a lot of comfort and confidence. The sub prime crisis graphically illustrated by the collapse of Northern Rock Bank in the UK has had a deep impact on the financial system in the US and in Europe but comparatively very little impact in this region.

With the cost of raising money spiralling in the wake of the crisis, are interest spreads expected to come under pressure for banks like NBO?
As a fallout of the crisis, the confidence levels of banks primarily in the US and Europe have been impacted. Banks, like stock markets, hate uncertainty and since there is an element of uncertainty in the financial system, regulators have been taking concerted action by putting in place stricter regulatory norms on the one hand and bailing out banks affected by the crisis on the other. Interest rates or spreads is a function of the level of competition in the market and as competitive pressures intensify spreads are sure to come under some strain.

NBO’s operations abroad have created pressures on its books. What are your plans for these operations?
Our vision is to focus on franchises in markets that will generate sustainable and acceptable returns. The favourable economic environment in the region allows us to add value to these operations. We will therefore put in place modern systems and processes that will mitigate any risks and ensure continuity. My work is to put in place strategies and processes to ensure income growth remains steady
and sustainable.

How do you think your extensive experience will benefit NBO?
Having started out from the junior most levels in banking in 1978, I have spent close to 30 years in the industry. What is important is not just experience but one’s ability to apply these learnings in different environments. For example, it is essential to understand the cultural framework in which an institution operates, its value systems and challenges. The importance of staff in any organisation cannot be overstated. Looking ahead, the bank has strong roots, a loyal and large customer base, and with oil prices expected to be high the external environment is favourable for growth.

NBO has posted some record numbers both in terms of asset growth and profitability in the last couple of years. Will the bank continue to grow at such levels?
Once a bank reaches a critical size or mass it is obviously more challenging to generate sufficient growth rates. Having said that, the growth potential in the economy coupled with the enhanced levels of liquidity present all financial institutions with many opportunities to grow and we intend to capitalise on this as much as possible.

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