MUSCAT: BankDhofar and Bank Sohar have entered into a non-binding memorandum of understanding on its proposed merger, both financial institutions said in separate stock market filings here on Wednesday.
The two lenders agreed to proceed with due diligence, subject to receiving regulatory approvals, the disclosure statements noted. The merger would create the country’s second-largest bank with a market capitalisation of $1.81 billion and assets of $13.69 billion, Reuters said in a report.
Talk of a potential merger between Bank Sohar and BankDhofar, Oman’s third-largest lender by market capitalisation, dates back to 2013, when Bank Sohar said it would consider a proposal from its larger peer to combine operations, the Reuters report added.
Bank Sohar shares edged up 0.54 per cent to close at 186 baisas, amid 1.59 million shares changing hand on the Muscat Securities Market on Wednesday.
This is a small market and the country has eight listed banks, including two Islamic banks, said Suresh Kumar, head of research at Al Maha Financial Services. “The merger is definitely good for the overall health of the financial sector (in Oman),” added Suresh Kumar.
The move will result in a lot of synergies and advantages for the merged entity. A bigger financial institution will be in a better position to fund large projects, than small entities.
