Oman’s Bank Sohar says will consider Bank Dhofar merger offer

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Bank Sohar, Oman’s fifth-largest lender, said on Sunday that it would consider a proposal from larger peer Bank Dhofar to merge operations, a move which would create the country’s second-largest bank with $10.7 billion of assets.

Bank Sohar said in a filing on Oman’s bourse that it had received a letter on July 18 from the board of directors of Bank Dhofar with regard to a merger proposal between the two banks.

Bank Dhofar, the larger of the two lenders, said last week that it had approached Bank Sohar and a deal would be dependent on Sohar being interested, as well as on both sets of shareholders and sector regulators agreeing.

“The Bank would like to reaffirm that it will consider Bank Dhofar’s proposal in order to conclude an adequate decision in line with the interest of the shareholders of Bank Sohar and the national economy,” Bank Sohar said in the statement.

Shares of Bank Sohar and Bank Dhofar were 1.4 percent up and flat at 7:10 GMT on the Muscat stock exchange. They are up 7.8 and 0.8 percent respectively since Dhofar’s filing last week.

Bank Dhofar reported a 21 percent slump in second-quarter net profit, according to Reuters calculations, earlier on Sunday.

Bank Dhofar’s acting Chief Executive, Abdul Hakeem bin Omaral-Ojaili, was quoted by the Oman News Agency on Saturday as saying the merged entity would be in a better position to compete and help finance major economic projects in the country.

Currently, Bank Dhofar and Bank Sohar are the fourth and fifth-largest banks by total assets and second and seventh-largest by market value respectively.

The new entity would have total assets worth 4.13 billion rials ($10.73bn), according to first-quarter financial statements, and a market capitalization of around $1.76bn.

Both figures would still put it significantly behind Oman’s largest lender, Bank Muscat, which has total assets and market value of 8.23bn rials and $3.34bn.

The Sultanate has seen one bank tie-up in recent times: HSBC Holdings merged its Omani assets with Oman International Bank in June 2012 to create HSBC Bank Oman, currently the sultanate’s third-largest lender by market value.