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Thu 24 May 2018 01:56 PM

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Omani banks seek merger to create $7bn giant

Oman Arab Bank says it is seeking a merger with Alizz Islamic Bank amid consolidation in Gulf banking sector

Omani banks seek merger to create $7bn giant

The wave of consolidation among banks in the Gulf is spreading to Oman from Saudi Arabia, the United Arab Emirates and Qatar.

Oman Arab Bank said on Thursday it’s seeking a merger with Alizz Islamic Bank, in a move that may create a lender with assets of about $7 billion. The bank approached Alizz to explore the possibility of a "strategic collaboration" that may lead to a merger.

The move comes amid consolidation among banks in the six-nation Gulf Cooperation Council to better compete in a crowded market. Abu Dhabi’s largest banks combined last year to create a $175 billion powerhouse, the Saudi lenders backed by HSBC Holdings and Royal Bank of Scotland are in the process of merging, while three Qatari banks are considering a combination to create the nation’s biggest Islamic lender.

KPMG said in a report in April that the potential merger in Qatar would trigger further consolidation initiatives in the country. Combinations in Bahrain are also “inevitable” and there are expectations of further consolidation in the medium term in the UAE, it said.

If the Omani merger is completed, it would be the first since HSBC in 2012 combined its operations in Oman with Oman International Bank SAOG. Talks between Bank Dhofar and Bank Sohar collapsed in 2016. The country’s largest lender is BankMuscat, with assets of about $30 billion.

Oman Arab Bank, owned 51 percent by Oman International Development & Investment Co and 49 percent by Jordan’s Arab Bank, had assets of 2.14 billion rials ($5.6 billion) at the end of last year, according to information on its website. Alizz had assets of 663 million rials at the end of March.

Alizz, which is traded in Muscat, has a market value of about $200 million. The shares climbed 5.2 percent on Thursday, bringing the gain this year to 21 percent.

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