The initial public offering (IPO) of Omani lender Bank Nizwa, the Sultanate's first Islamic bank, is oversubscribed by at least 100 per cent, a source familiar with the share listing said.

'The count is still ongoing but so far at least 100pc of the IPO has been oversubscribed. The final count will be announced next week,' the source said.

Bank Nizwa's one-month-long IPO ended on Tuesday. It plans to raise $156 million by selling 40pc of its capital in the IPO on the Muscat Securities Market.

The bank offered 600m shares, with a par value of 102 baisas each.

The bank is not yet operational and has only a representative office. Three branch openings are planned after the IPO.

Bank Nizwa, sponsored by Al Khalili Group and other local shareholders, has a capital base of RO150 million ($390 million) and the IPO is being managed by local lender Oman Arab Bank.

The shares are due to list on June 6 and the bank is expected to be operational by July this year.

While neighbouring Gulf states have ramped up Islamic finance services in recent years, Oman has stood out by refusing to participate in the industry, with its central bank head saying in 2007 'banks should be universal'. The central bank reversed that stance last year.

Another Islamic bank under formation, Al Izz International Bank, is expected to issue an IPO of 40pc of its 100m rials capital by June, central bank of Oman said earlier.

Conventional lenders are also allowed to establish Islamic banking windows in Oman.-Reuters