Oman's Bank Sohar and Bank Dhofar have entered into a non-binding agreement on a proposed merger, the duo said, in the latest move towards consoldiation in the country's bloated banking sector.
The two lenders agreed to proceed with due diligence, subject to receiving regulatory approvals, they said in separate statements.
The merger would create the country's second-largest bank with a market capitalisation of $1.81 billion and assets of $13.69 billion, Thomson Reuters data shows.
"The banking sector in Oman is competitive and this will mean the merged bank can increase its loan portfolio and capital to become a bigger player," said Sameer Kattiparambil, associate vice president at EFG-Hermes in Oman.
Oman's financial regulator has sought to control the number of lenders, which currently stand at about 18 banks for a population of only 4 million. However, deals in the sector have so far proved elusive.
However, Oman's United Finance said on Tuesday that its board was considering a non-binding takeover offer from Al Omaniya Financial Services.
That followed an announcement by the central bank that it had approved the proposed merger of Oman International Development and Investment Co (Ominvest) and Oman National Investment Corporation Holding.
Talk of a potential merger between Bank Sohar and Bank Dhofar, Oman's third-largest lender by market capitalisation, date back to 2013, when Bank Sohar said it would consider a proposal from its larger peer to combine operations.
