Bank Dhofar SAOG is exploring the possibility of combining with its smaller competitor Bank Sohar as it seeks to create the second-biggest Omani lender with about $10 billion in assets. The banks’ shares climbed.
The board at its meeting yesterday “expressed interest and resolved to commence discussion with Bank Sohar to explore the possibility of merger between the two banks,” Bank Dhofar said in a statement posted on Muscat stock exchange, without giving further details. The proposal is subject to interest of Bank Sohar, due diligence and regulatory approvals, it said.
The possible merger follows HSBC Holdings Plc, Europe’s biggest bank, merging its Omani operations last year with Oman International Bank SAOG to create a lender with about $6 billion in assets. HSBC Bank Oman SAOG is currently third-biggest lender by assets after BankMuscat SAOG, which had $21 billion in assets at the end of last year, and National Bank of Oman SAOG.
Oman’s government spending plan is boosting demand for financing and commercial bank lending will rise by 15 percent to 20 percent this year, central bank Governor Hamud Bin Sangur Al-Zadjali said in March. Oman has the second-smallest economy among the six-nation Gulf Cooperation Council, which also includes Saudi Arabia and the United Arab Emirates.
Bank Sohar shares surged as much as 3.9 percent to 0.213 rial before trading at 0.207 rial at 12:26 p.m. in Muscat. Bank Dhofar was unchanged after gaining as much as 2.1 percent.
Bank Dhofar had assets of 2.14 billion rials ($5.56 billion) at the end of last year, while Bank Sohar had 1.79 billion rials, according to their financial statements.