HSBC Bank Oman and local rival Sohar International Bank said Wednesday that they have agreed on terms of a merger that will create one of the biggest banks in the Sultanate.
Under the merger agreement, all assets and liabilities of HSBC Oman will be transferred to Sohar International, the banks said in a separate regulatory filing with the Muscat Stock Exchange without disclosing the deal value.
The duo said upon the completion of the merger, HSBC Oman will cease to exist as a legal entity and its shares will be cancelled.
Shareholders of HSBC Oman will be offered a consideration valuing HSBC Oman at 1 times book value, with an option for shareholders to elect to receive cash provided it does not exceed 70% of the total consideration payable by Sohar International, the filing added.
The shares that form a part of the consideration to HSBC Oman shareholders will value Sohar International at 1 times book value.
HSBC Oman and Sohar International will join other banks in neighboring GCC countries in consolidating their operations to enhance their competitive positioning, rightsize their portfolios and add scale.
HSBC has been in Oman since 1948. The bank’s Middle East operations in Oman merged with Oman International Bank in 2012 to create HSBC Bank Oman.
“HSBC Bank Middle East Limited will now seek regulatory approval to establish a new, wholly owned branch of HSBC Bank Middle East Limited in Oman, should the merger of HSBC Oman and Sohar International receive the necessary shareholder approvals,” HSBC said in a separate statement that was seen by Reuters.
The merger, which is still subject to regulatory and shareholder approval, is expected to close in Q2 2023. Sohar International is also linked with a potential merger with Omani Islamic lender Bank Nizwa.