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HSBC Oman’s final day on Muscat bourse draws near

Three anchor investors have committed to taking 10 percent each of OQ Gas Networks' offering at the top end of the range Oman News Agency
Three anchor investors have committed to taking 10 percent each of OQ Gas Networks' offering at the top end of the range
  • Unit is being bought by Sohar International in cash and share-swap deal
  • Sohar is part-owned by Omani government
  • All customers and staff to be transferred by August 17

Shares in HSBC Oman will cease trading on the Muscat Stock Exchange on Thursday ahead of its acquisition by Sohar International Bank.

Sohar, which is minority owned by Omani government institutions, has agreed a cash and share-swap deal to buy the HSBC unit.

HSBC expects the merger to be completed on August 17, after which all HSBC Oman customers and staff will be transferred to Sohar and HSBC Oman will become defunct.

After HSBC Oman ceases trading, shareholders can choose whether to receive OR0.177 ($0.44) per share in cash, although no more than 70 percent of the bank’s shares can be sold in this manner.

If shareholders representing more than 70 percent opt for cash, their stakes will be bought on a pro rata basis.

Sohar will pay a maximum of OR248.1 million ($644.4 million) in cash to HSBC Oman shareholders.

The remaining 30 percent will be exchanged for shares in Sohar at a ratio of 1.467 Sohar shares for each HSBC Oman share.

Shares in Sohar closed at OR0.106 on Tuesday. HSBC Oman ended the day at OR0.165.

Sohar is the sultanate’s third largest bank by market capitalisation, according to the website Simply Wall St. HSBC Oman is sixth.

The merger will make Sohar Oman’s No 2 bank by assets. It is also in talks to acquire smaller rival Bank Nizwa.

Oman’s banking sector had total assets of $95.2 billion at the end of 2022, near-flat year on year but up from $76.4 billion in 2017, according to S&P Market Intelligence.

Sohar International made a first-half net profit of OR23.68 million, up from OR18.47 million a year earlier as rising net interest income more than outweighed higher expenses and declining earnings from its Islamic banking unit.

HSBC Oman made a net profit of OR21 million in the first six months of 2023, up 42 percent from OR14.8 million in the prior-year period.

After the sale, parent company HSBC will launch a new wholesale banking division in the sultanate.

HSBC Middle East, which does not include the Omani subsidiary, made a pre-tax profit of $673 million in the first half of 2023, up from $378 million a year earlier. Net interest income more than doubled to $764 million and offset rising expenses.