OIB-HSBC Oman merger 'almost complete'

02/06/2012 08:43 AST

Merger between Oman International Bank (OIB) and HSBC Oman to create one of the largest banks in Oman is almost complete with the re-election of a seven-member board, with four nominees from HSBC, on Thursday.

The merged entity, called HSBC Bank Oman, will be in place, once it is registered with the Ministry of Commerce and Industry, which is a normal procedure in such mergers. Also, the legal case filed by an Indian businessman against HSBC will not affect the merger, top-level officials of both banks told 'Times of Oman'.

Dr Juma Ali Juma Al Juma, board member of the bank, said the merged entity (which is operating in Oman) will take care of any such liabilities, arising from litigations under the law. Since banks are engaged in accepting deposits and lending money, such litigations are common in the financial sector.

"For example, Ali Redha case is still in the court. When you merge, there are many such cases, he added, on the sidelines of the ordinary general meeting to elect a new board. Dr Al Juma was referring to a case linked to a long pending dispute between OIB, BankDhofar and Ali Redha Al Lawati and his companies, who alleged to have been possessing 1.925 million shares of BankDhofar, which were pledged to OIB.

Further, sources said, the ministry letter stated that if a valid creditor objection is received, the parties cannot proceed with the merger under the law. But no valid creditor objection has been received (in this case), added sources. Dr Al Juma also revealed that the bank has written a letter to the Indian businessman.

HSBC holds a majority 51 per cent stake in the merged entity. The merged bank will be one of the leading players in Oman, with a combined branch network ranging between 94 and 97, paid up capital of approximately RO220 million and an authorised capital of RO750 million.

Apart from Dr Al Juma, the newly elected board members are Waleed Al Zawawi, Sheikh Aimen Hosni, David Kotheimer, Simon Cooper (chief executive of HSBC in the Middle East and North Africa), Francesca McDonald and Abulfattah Sharat.

The last four members represent HSBC Middle East on the board. The re-election of the board, follows approval given by the shareholders for the merger at an extra-ordinary general meeting (EGM) on May 9.

The newly constituted board nominated Simon Cooper as chairman and Waleed Zawawi as deputy chairman of the bank.

Responding to a question on whether the merged bank plans to retrench employees to take advantage of synergies, Dr Al Juma said; "There is no plan to kick any of our Omani staff out. (Rather) There is a plan to train them to upgrade (their skills) to international standards.-?

The HSBC group will provide certain support services to HSBC Bank Oman under a services agreement with an initial term of ten years.

He said that the new board will take a decision on when to proceed with a plan to sell OIB's branch operations in India and Pakistan. OIB has five overseas branches -" three in Pakistan and two in India.

Oman International Bank, which is Oman's fifth largest bank with the second largest branch network in the country, had gross assets of $3.2 billion as at the end of December 2011. HSBC Oman had gross assets of $2.5 billion by December 2011.

Times of Oman