(MENAFN - Khaleej Times) HSBC Bank Middle East Ltd, an indirect wholly-owned subsidiary of HSBC Holdings plc, has entered into an agreement with Oman International Bank, or OIB, to merge its Oman branch and HSBC Oman with OIB, it was announced here on Wednesday.
Following the merger, HSBC will hold 51per cent of the combined entity which will be re-named HSBC Bank Oman SAOG.
OIB, 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 December 31, 2011 HSBC Oman had gross assets of 2.5billion. OIB will issue to HSBC new shares equivalent to a 51 per cent shareholding in the combined entity, HSBC Bank Oman. The HSBC Group will provide certain support services to HSBC Bank Oman under a services agreement with an initial term of 10 years.
"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 recognise the tremendous business opportunities in Oman," Simon Cooper, deputy chairman and chief executive officer of HSBC in the Middle East and North Africa, said.
The merger is subject to regulatory and other approvals, including approval by OIBs shareholders, and is expected to complete in the second quarter of 2012.