Fresh bank merger in Muscat beckons

01 February 2002

Another move has been made in the consolidation of the Omani banking sector. Bank Dhofar al-Omani al-Fransiand Majan International Bankhave announced their intention to merge to the Central Bank of Oman and the Muscat Securities Market.

'We are looking at a friendly merger, that is partly based on the fact that the two banks have a number of common shareholders,' says Ahmed bin Ali al-Shanfari, Bank Dhofar's general manager. 'We have appointed consultants to examine how a merger could be structured. They will start work at the beginning of February when full-year balance sheets have been put together by both banks, and we are expecting to hear from them by the end of March.'

Bank Dhofar and Majan International are, with the exception of the specialist Alliance Housing Bank, the two smallest Omani banks, with total assets of about RO 300 million ($780 million) and RO 100 million ($260 million) respectively. Majan International has six branches and Bank Dhofar has 43. The latter boosted its network in late 2000 with the acquisition of 16 branches from the network of Commercial Bank of Oman(ComBank)in a RO 3.5 million ($9 million) transaction (MEED 12:1:01). The 16 branches, along with the staff manning them, were sold as a result of the merger of ComBank and Bank Muscat, which produced some duplication within the resulting branch network (MEED 22:12:00).

The proposed merged entity would not only have a firmer capital base, but would benefit from the possibility of cost-cutting synergies.

The interests of international banks in the merger have been reduced by the recent $11 million sale of a 6.3 per cent stake in Bank Dhofar to the central pension fund by BNP Paribas. The only other international bank interested in the deal will be Commerzbank, which holds a minority position in Majan International.

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