Arabian Gulf Business Insight - Oman’s Ahli Bank rejects merger offer from Bank Dhofar

Oman-based Ahli Bank has rejected a non-binding offer from the sultanate’s second-biggest lender Bank Dhofar for a possible merger.

“The Board of Directors has studied the proposal and decided not to accept it,” Ahli Bank said in a bourse filing, without providing a reason for the board’s decision.

Bank Dhofar has assets worth $11.2 billion, while Ahli Bank holds about $7.9 billion in assets, Reuters reported, citing their latest financial statements.

Ahli Bank, partly owned by Bahrain’s Ahli Bank, operates 23 branches in Oman.

Last month, ratings agency Moody’s stated that banks in the GCC region will see an increase in mergers and acquisitions (M&As), driving synergies and oil revenue divergences in the region.

In February, HSBC Bank Oman received approval from the Central Bank of Oman for its proposed merger with Sohar International Bank. The merger deal is expected to be completed in the second half of 2023.

According to a report from global consultants PwC, the majority of Middle East M&A activity in 2022 was concentrated in the UAE, Saudi Arabia and Egypt, which collectively recorded 563 deals, or 89 percent of the region’s total deal volume.

Romil Radia, regional deals markets leader at PwC Middle East, said:“The Middle East is certainly not immune to the economic headwinds affecting M&A elsewhere, but, at the start of 2023, the mood here is more optimistic than most global markets and some momentum from last year has continued into 2023.

“In its favour, the region has deep financial resources available for deals, which is supporting outbound and cross-border transactions.”

Globally, M&A volumes slumped by 48 percent to $575.1 billion in the first quarter of this year, compared to $1.1 trillion seen during the same period last year.

“Rising interest rates, high inflation, and a slowdown in global growth have dented these volumes. The collapse of SVB (Silicon Valley Bank) and Credit Suisse has only added salt to the injury for the global investment bankers,” said Dubai-based Vijay Valecha, chief investment officer, Century Financial.