The Muscat-based Bank Dhofar is mulling a possible merger with Oman’s Bank Sohar.

Bank Dhofar, the second largest lender in the Sultanate by assets, has communicated the terms for a deal to Bank Sohar, ”on which it is willing to proceed with the merger”, it said in a statement to Muscat Securities Market where its shares are traded.

“Those terms are now being considered by Bank Sohar and may be subject to further discussion and negotiation between the two banks,’’ Bank Dhofar said in the statement without revealing the proposed terms.

The lender said it has concluded the financial and legal due diligence on April 23.

Bank Sohar is the fifth-largest lender in Oman and a merger with Bank Dhofar will create second-largest bank in the Gulf state with a market capitalisation of $1.81bn and assets of $13.69bn, according to news agency Reuters, which cited Thomson Reuters data.

“If and when an agreement is reached on the terms, disclosure of the agreed terms will be made available to the market and approval will be sought from the regulators and the bank’s shareholders,’’ Bank Dhofar said in the statement. Read more on the Oman banking sector.