Oman-based Bank Sohar has entered into a non-binding agreement with Bank Dhofar on a proposed merger that is likely to create the country’s second-largest bank by market capitalization.
The move is aimed at consolidating the country’s bloated banking sector.
According to Reuters, the merger is likely to create a bank with an estimated market capitalization of $1.81bn with assets worth $13.69bn.
Oman’s financial regulator is working on controlling the number of banks in the country. Currently, Oman has 18 banks for a population of four million people.
EFG-Hermes associate vice president Sameer Kattiparambil was quoted as saying: "The banking sector in Oman is competitive and this will mean the merged bank can increase its loan portfolio and capital to become a bigger player."
The proposition of a merger between the two financial institutions was first reported in July 2103 when Bank Dhofar said that it was exploring the possibility of a merger with its smaller rival.
Bank Dhofar’s then acting CEO, Abdul Hakeem bin Omaral-Ojaili had been quoted by the Oman News Agency as saying that the merged entity would be better placed to compete and help finance major economic projects in the country.
Image: The proposed entity will have a market capitalization of $1.81bn. Photo: courtesy of Chaiwat/ freedigitallphotos.net.