HSBC Bank Middle East has entered into an agreement to merge its Oman branch with Oman International Bank (OIB), in a deal which will see HSBC hold 51% of the combined entity and retain management and board control.
HSBC will inject additional capital of up to $97.4m into its Oman operation from its internal resources, thus creating the Sultanate's second-largest bank by branches and deposits which will be called HSBC Bank Oman SAOG.
OIB is Oman's fifth largest bank and with 85 branches it is the second largest branch network in the country. The bank has gross assets of $3.2bn (Dhs11.75bn), with activities evenly split between retail and wholesale banking. HSBC currently has nine branches in the country totalling between them $2.5bn worth of assets.
George Sandars, corporate partner at SNR Denton, the law firm which assisted with the deal said, “Whilst this type of deal, a merger between a local bank and an international bank, is quite rare in the region where M&A activity had almost ground to a halt, we are proud to have provided our extensive transactional, corporate and financial institutions’ expertise on such a significant development for both Oman and HSBC.”
The merger is subject to regulatory approvals and approval by OIB’s shareholders, but will not affect OIB's listing on the Muscat Securities Market. Oman's Central Bank approved the planned merger last month, and completion is anticipated in the second quarter of 2012. The HSBC Group will provide certain support for an initial term of 10 years to the newly merged bank under a services agreement.
Ewan Stirling, CEO of HSBC’s operations in Oman, said: “The merger will offer us superb business opportunities in Oman and the opportunity to grow organically in the region. This deal is incredibly positive, not just for the parties involved, but also for the customers of both banks who will have access to a large network of branches in Oman along with a leading international network.”
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