The boards of Bank Dhofar and NBO have agreed to initiate talks for a possible merger. Bloomberg
The boards of Bank Dhofar and NBO have agreed to initiate talks for a possible merger. Bloomberg

Merger of two Omani banks will form an entity with 25% share of loan market



The merger of Bank Dhofar and National Bank of Oman will create a lender that will account for 25 per cent of the aggregate banking assets and the Oman's loans market, according to a research report.

The merged entity, with $20 billion (Dh74bn) in combined assets, will be the second-largest financial institution in the country, behind Bank Muscat, EFH Hermes said in a report released on Monday.

Bank Muscat currently accounts for 36 per cent each of the banking assets and loans market in the country.

Last month, Bank Dhofar and NBO said their boards have agreed to discuss a potential merger and a deal will be subject to obtaining “final approval from respective boards, shareholders, stakeholders and regulators”. Neither bank gave details about the timeline for the tie-up or how they intend to structure the possible transaction.

“Given the weak macro in Oman, we believe the merger makes sense and would lead to cost synergies and funding cost optimisation," Rajae Aadel, an analyst at EFG Hermes Middle East and North Africa research team, said.

According to international benchmarks, the cost synergies are typically equal to 30 per cent of the target entity’s cost base. Given that NBO and Bank Dhofar have a smaller retail distribution network, EFG estimated that synergies in this merger will only be 25 per cent of NBO’s cost base.

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Saudi banks to see credit-positive recovery in 2018, says Moody’s

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Banks in the Arabian Gulf are increasingly looking to merge in a bid to gain scale to cope with tougher operating conditions as low oil prices in the past three years have squeezed their profit margins. Regional banks are set to see a stronger performance this year as macroeconomic conditions improve and demand for credit grows, according to analysts and reports by rating agencies Moody’s Investors Service and S&P Global Ratings.

Both the banks have four common shareholders. The Civil Services Pension Fund, Ministry of Defence Pension Fund, State General Reserve Fund and Public Authority for Social Insurance hold collectively a 28 per cent stake in Bank Dhofar and 29 per cent of NBO.

The Egyptian investment bank said that the merger deal is likely to be executed through a stock market transaction.

“We believe this will be done via a share swap (as in previous GCC mergers),” the bank said. “We estimate a 1:1 swap ratio (based on 52-week average share price) and given Bank Dhofar’s larger market cap, we believe it will likely absorb NBO.”

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AWARDS
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German intelligence warnings
  • 2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
  • 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
  • 2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250 

Source: Federal Office for the Protection of the Constitution

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Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
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COMPANY PROFILE
Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
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Key facilities
  • Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
  • Premier League-standard football pitch
  • 400m Olympic running track
  • NBA-spec basketball court with auditorium
  • 600-seat auditorium
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  • An elevated football field that doubles as a helipad
  • Specialist robotics and science laboratories
  • AR and VR-enabled learning centres
  • Disruption Lab and Research Centre for developing entrepreneurial skills
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Dubai Bling season three

Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed 

Rating: 1/5

Tales of Yusuf Tadros

Adel Esmat (translated by Mandy McClure)

Hoopoe