Oman Arab Bank (OAB) will acquire the entire issued share capital of the Muscat-based Alizz Bank in a deal that will create a lender with more than 3.2bn rials (Dh30.6bn) in assets.
“If [the process] is completed, AIB will become a wholly-owned Islamic banking subsidiary of OAB and converted into a closed joint-stock company,” Alizz Bank said in a statement on Tuesday to the Muscat Securities Market, where its shares trade.
The assets and liabilities of OAB’s own Islamic brand, Al Yusr, will be transferred to Alizz as part of the merger process, the bank said. OAB, which is an unlisted subsidiary of Oman International Development and Investment Company (Ominvest), will also convert into a public company.
“OAB will continue to operate its conventional banking business and AIB, by then a wholly-owned subsidiary of OAB, will operate its Islamic banking business,” Alizz bank said.
Alizz Islamic Bank grew total assets by 5.3 per cent to 718.8 million Omani rials (Dh6.86bn) in the year to December 31, 2019, but declared a loss of almost 10 million rials for the period.
OAB, on the other hand, had assets of 2.5bn rials as of December 31, 2019.
The merger is the latest in a series of recent deals involving Islamic lenders in the Gulf, with Dubai Islamic Bank completing its acquisition of smaller rival Noor Bank earlier this year, creating an entity with assets of more than Dh275bn.
Kuwait Finance House is also in the midst of an acquisition of Bahrain’s Ahli United Bank in a deal that would create the region’s biggest Islamic lender, with combined assets of $96.7bn (Dh355bn), but the transaction was postponed earlier this year due to difficulties in finalising due diligence during the current Covid-19 outbreak.
In the GCC, Oman remains the fastest-growing Islamic banking market at a rate of 10 per cent in the first nine months of 2019, according to a recent report from Moody's Investors Service.
Oman has two standalone Islamic banks and six Islamic windows at conventional banks offering Islamic services and the sector's market share has risen from zero to around 15 per cent of banking system financing assets as of September 2019, with potential for further growth, the ratings agency said.
