Mar 22 2012 |
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CBO to consider OIB-HSBC Oman merger proposal
By A. E. James Thu Mar 22 2012Muscat: The Central Bank of Oman (CBO) board will consider the much-awaited merger proposal between Oman International Bank ( OIB ) and HSBC Bank Middle East 's Oman operations on March 25.
Although the financial market was agog with rumours on the proposed merger ever since both banks made announcements in Octoberlast year, both managements were tight-lipped on the whole proposal thereafter.
The CBO board will be meeting under the chairmanship of Dr Ali bin Mohammed bin Moosa, deputy chairman of CBO's board of governors. Market sources said that if the merger happens, the merged entity will be one among the top three banks in Oman, triggering a tough competition. OIB has been looking for a strategic partner for achieving a better growth, new technology and a strong management team.
Both banks will concentrate on certain synergies. For instance, the Omani bank can gain expertise from a global player like HSBC .
OIB , which has a net work of almost 83 branches within Oman, has access to low cost deposits. This can be efficiently used for growth, if both banks join hands. The Omani bank, which could not achieve a strong growth in the last three to four years, has a good balance sheet and strong capital adequacy ratio.
OIB has a well-diversified customer base and therefore, there are enough opportunities for taking big ticket deals.
Further, they can leverage on both fee-based and non-fee-based incomes, if they join hands with HSBC . The British bank's strength is primarily in its products.
HSBC , which is mainly focusing on wholesale banking and wealth management in the country, has a network of five branches and a customer service department. However, OIB is engaged in the entire gamut of commercial banking activities including retail, corporate and fee based activities.
CBO said that the board will also review the interest rate ceiling on personal loans offered by commercial banks in Oman. Further, the board will consider applications from some Omanicompanies seeking permission for establishing money exchanges.
There are also applications from investment companies to take stake in finance and leasing firms, which will also be considered by the CBO board in its meeting on March 25.
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