Oman: Banking merger talks collapse
BankMuscat (SAOG) on Saturday announced the collapse of its merger talks with National Bank of Oman (NBO). In a statement, Sheikh AbdulMalik bin Abdullah Al Khalili, Chairman, BankMuscat (SAOG), said “This is to confirm that the merger talks between BankMuscat (SAOG) and National Bank of Oman (NBO) have been formally called off, following NBO expressing its reluctance to continue with the merger process."
“The merger talks with NBO have always been accorded the highest level of importance at BankMuscat. The Board of Directors of BankMuscat had officially informed NBO on the evening of 28th February of its decision to proceed with and conclude the merger talks at an understanding that NBO’s networth as at 31 December 2004 should be estimated at RO 97 million, (or at the level subsequently approved by the Central Bank of Oman), in the absence of the audited financial statements of NBO, duly certified by the Central Bank of Oman, being provided to the Bank. BankMuscat had made this offer recognizing the importance of bringing the merger talks to a speedy conclusion, so as to protect the interests of stakeholders of both banks and the society at large. This revised figure is in keeping with of the recommendations of the independent audit conducted by BankMuscat of the reasonableness of provisions in NBO’s books of accounts for the year 2004.
“The purchase consideration for the merger, it may be recalled, as per the terms agreed between the two banks, was based upon NBO’s net worth being RO 100 million (as at 31 December 2004). It was further agreed that the merger consideration would be adjusted upwards or downwards based on the audited net worth of the bank as at 31 December 2004 and the reasonableness of provisions as established by an independent auditor.
“BankMuscat would like to place on record its appreciation to the Central Bank of Oman, the Capital Markets Authority and all the well-wishers of the Bank and the Banking industry in Oman who had supported its efforts to create a significant banking entity in the Sultanate.
“BankMuscat would also like to wish NBO and all its stakeholders all the very best for the future.”
The Board of Directors of BankMuscat (SAOG), the largest bank in the Sultanate of Oman and the Board of Directors of National Bank of Oman, the oldest local bank in the Sultanate of Oman, had unanimously approved a merger proposal between the two banks on 23 September last year. The proposal had also met with approvals from the Central Bank of Oman and the Capital Markets Authority, Sultanate of Oman, shortly thereafter. The merger proposal, which was subject to the approval of the shareholders of the two organizations, and due approval and registration with the Ministry of Commerce & Industry, Government of Oman, was set to change the face of the Omani banking landscape with the creation of a USD 6.65 billion banking entity that, it was believed, would be far better equipped to take on the challenges of cross border and domestic competition and provide greater value to its family of stakeholders.