By Hadeel Al Sayegh
DUBAI (Reuters) - HSBC Bank Oman and local rival Sohar International Bank have entered into a binding merger agreement, the two lenders said on Wednesday.
All assets and liabilities of HSBC Oman will be transferred to Sohar International, the banks said in two separate regulatory announcements, without disclosing the deal value.
On completion of a merger, HSBC Oman will cease to exist as a legal entity and its shares will be cancelled, the banks said.
HSBC has been in Oman since 1948.
HSBC Bank Middle East’s operations in Oman in 2012 merged with Oman International Bank to create a 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," the bank said in a separate statement on Wednesday.
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 shares that form a part of the consideration to HSBC Oman shareholders will value Sohar International at 1 times book value, they said.
With this decision, HSBC Oman and Sohar International will join other lenders of neighbouring Gulf countries in consolidating their operations.
Saudi Arabia's biggest lender National Commercial Bank had merged with smaller rival Samba Financial Group in 2021 to create Saudi National Bank with more than $240 billion in assets.
Abu Dhabi has also seen two major bank mergers.
(Reporting by Hadeel Al Sayegh; Editing by Sherry Jacob-Phillips and Louise Heavens)