SNR Denton has advised HSBC Holdings PLC and its subsidiary HSBC Bank Middle East Limited (HSBC) on the merger of HSBC’s operations in the Sultanate of Oman with publicly-traded Oman International Bank SAOG (OIB).
Under the terms of the merger, HSBC will have management and board control of the combined entity. Prior to completion HSBC will inject additional capital of up to $97.4 million into its Oman operation from its internal resources. The merger will create the Sultanate’s second-largest bank by branches and deposits.
OIB, which is Oman’s fifth largest bank with the second largest branch network in the country with 85 branches, has gross assets of $3.2 billion (Dhs11.75 billion), with activities evenly split between retail and wholesale banking. HSBC, with 9 branches and $2.5 billion worth of assets in Oman, will hold 51 per cent of the share capital of the combined entity, which will be renamed HSBC Bank Oman SAOG.
George Sandars, corporate partner at SNR Denton said: “We are extremely pleased to have advised on this merger that will present HSBC with a great opportunity to invest for growth in a key Gulf economy. Whilst this type of deal, a merger between a local bank and an international bank, is quite rare in the region, where M&A activity had almost ground to a halt, we are proud to have provided our extensive transactional, corporate and financial institutions expertise on such a significant development for both Oman and HSBC.”
Ewan Stirling, CEO of HSBC’s operations in Oman said: “We were impressed with the advice offered by the SNR Denton team who played a significant part in ensuring that this important transaction came to fruition. The merger will offer us superb business opportunities in Oman and the opportunity to grow organically in the region. This deal is incredibly positive, not just for the parties involved, but also for the customers of both banks who will have access to a large network of branches in Oman along with a leading international network.”
The merger, which is subject to regulatory approvals and approval by OIB’s shareholders, will not affect OIB’s listing on the Muscat Securities Market, and completion is anticipated in the second quarter of 2012. Oman’s central bank approved the planned merger in March. The HSBC Group will provide certain support services to HSBC Bank Oman under a services agreement with an initial term of 10 years.
The core SNR Denton team in Muscat was led by corporate partner George Sandars, Andrew Steele and Rachael Oxby, with assistance from Ahmed Al Barwani, Dianne Hamilton, Adil Al Yahyai, James Barton and Jennifer Dixon (Corporate), Abdelrahman El Nafie and Fatma Makki, (Dispute Resolution), Sadaf Buchanan, Philip Keun, Sarah Peuch and Anna Tostevin (Banking) and Kamel Daou and Nadine Naji (Qatar, Corporate).
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