Omans Bank Dhofar has proposed a preliminary share swap ratio for a possible merger with Bank Sohar.
Bank Sohar has total assets worth approximately RO2bn ($5.2bn) while Bank Dhofar has assets worth almost RO2.8bn, according to the banks first quarter statements.
A preliminary study into the merger by an external party has also been completed, Bank Dhofar said in a note to the Oman stock exchange on 2 June.
Bank Sohar is now considering the swap ratio proposal, which remains subject to a due diligence exercise.
Banks in the region are encouraged to merge to create larger entities better able to cope with shocks, as regulatory changes are forcing them to have larger amounts in their capital reserves. Omans conventional banks are also increasingly facing competition from Islamic banks.