(MENAFN - Arab News) HSBC Bank Middle East Ltd. (HSBC), an indirect wholly-owned subsidiary of HSBC Holdings plc, has entered into an agreement with Oman International Bank (OIB) to merge its Oman branch (HSBC Oman) with OIB. Following the merger, HSBC will hold 51 percent of the combined entity which will be re-named HSBC Bank Oman SOAG, according to a statement received here yesterday.
OIB, which is Oman's fifth largest bank with the second largest branch network in the country, had gross assets of 3.2 billion as at the end of December 2011. The merger will not affect OIB's listing on the Muscat Securities Market.
Under the terms of the merger, HSBC will inject additional capital of up to 97.4 million in cash from its internal resources into HSBC Oman and the business of HSBC Oman will then be merged with OIB. As at Dec. 31, 2011 HSBC Oman had gross assets of 2.5 billion. OIB will issue to HSBC new shares equivalent to a 51 percent shareholding in the combined entity, HSBC Bank Oman SOAG. The HSBC Group will provide certain support services to HSBC Bank Oman SOAG under a services agreement with an initial term of 10 years.
Commenting on the transaction, Simon Cooper, deputy chairman and Chief Executive Officer of HSBC in the Middle East and North Africa, said: "This transaction presents HSBC with a great opportunity to invest for growth in a key Gulf economy. With over 60 years' presence in the country, we recognize the tremendous business opportunities in Oman."
The merger is subject to regulatory and other approvals, including approval by OIB's shareholders, and is expected to complete in the second quarter of 2012.