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12-04-23

Bank Dhofar Pursues Merger with Smaller Rival Ahli Bank in Oman

(MENAFN) Bank Dhofar, Oman's second-largest bank, has expressed its interest in merging with its smaller rival, Ahli Bank. The potential merger could create a lender with just under USD20 billion in assets, according to regulatory filings made on Tuesday. Bank Dhofar has over USD11 billion in assets, while Ahli has under USD8 billion. Ahli Bank has announced that it will study Bank Dhofar's offer. However, Bahrain's Ahli United Bank owns over a third of Oman's Ahli Bank, and it remains unclear how the merger will affect its stake.

Following the announcement, stock in Bank Dhofar rose over 3 percent in trading on the Muscat Securities Market on Tuesday, to more than 40 cents a share. While Oman is a smaller oil producer than other Gulf Arab states, analysts expect it to use higher crude prices to bring down its budget deficits. However, ratings firm Fitch noted in December that Bank Dhofar "remains highly dependent on government spending."

Oman's banking sector has seen several mergers and acquisitions in recent years as part of the government's efforts to strengthen the industry. Last year, HSBC Bank Oman and local rival Sohar International Bank entered into a binding merger agreement. The central bank approved the merger in February, and it is expected to complete in the second half of this year.

The potential merger between Bank Dhofar and Ahli Bank is another example of the consolidation trend in Oman's banking sector. While the merger offers several benefits, such as increased scale and cost efficiencies, the impact on Bahrain's Ahli United Bank's stake in Ahli Bank remains uncertain. The merger is still in its early stages, and it remains to be seen whether it will be successful or not.
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