May 24 2012
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HSBC Oman, OIB merger 'halted' in Oman
The order (seen by Times of Oman) issued on May 16 by the Ministry of Commerce and Industry , Directorate-General of Commerce in Muscat, states that according to Article 13 bis 8 of Commercial Companies Law 4/74, the merger has been suspended unless the objection raised by the businessman is settled or withdrawn by him. Another option is that the said objection is overruled by a court order.
Meanwhile, when contacted, HSBC declined to comment on the matter.
HSBC Bank Middle East, a wholly-owned subsidiary of HSBC Holdings, had announced in April this year that it had entered into an agreement with OIB to merge HSBC's Oman operations with OIB . The merger was expected to be completed in the second quarter of this year and according to the agreement, HSBC was supposed to own 51 per cent of the new combined entity.
However, the objection raised by Saleem Khan the owner of a garments factory in Barka with the Ministry of Commerce and Industry , citing the legal case which he is fighting with the bank for the last five years, has halted the proposed merger.
Khan has been running garments business in Oman, Dubai and Jordan since 1995. Unfortunately, he developed strained relations with the bank.
"I had to face a lot of trouble with the bank but I approached them seeking justice. Disappointed with them, I approached the court later,- Khan told Times of Oman over phone from India.
"I have full faith in the Sultanate's judiciary. I welcome the intervention by the Ministry of Commerce and Industry . I am fighting this case for a long time. I got justice in the Primary Court and Appeal Court. Now, the Supreme Court also has not cancelled the Appeal Court verdict. It has just referred it back to Appeal Court with two queries. I have unflinching faith in the law of the land,- Khan said.
According to the court ruling, the bank has to pay approximately RO2 million as compensation.
Under the terms of the merger, HSBC Middle East had to inject an additional capital of $97.4 million into HSBC Oman and then only the business of HSBC Oman could be merged with OIB . As of December 31, 2011, HSBC Oman had gross assets of $2.5 billion, while OIB , the fifth-largest bank by assets in Oman, had gross assets of $3.2 billion (according to available data).
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