Controversial bank back in the spotlight over 34.9% stake bid

THE COMMERCIAL Bank of Qatar (CBQ) is set to buy a 34.9% stake in the controversial National Bank of Oman (NBO). The move follows the collapse of a merger between NBO and BankMuscat earlier this year.

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By  Rhys Jones Published  June 5, 2005

THE COMMERCIAL Bank of Qatar (CBQ) is set to buy a 34.9% stake in the controversial National Bank of Oman (NBO). The move follows the collapse of a merger between NBO and BankMuscat earlier this year. CBQ is expected to make a total investment of around US$325 million in acquiring the proposed 34.9% stake — 12.5% by way of a private placement and 22.4% from the secondary market. NBO’s board has already accepted a bid of US$115.5 million from CBQ to acquire 10 million shares at a price of US$11.5 per share — US$2.5 more than BankMuscat was prepared to pay. “The price is much higher than it was in the proposed BankMuscat deal but CBQ must think it is a good deal,” Haissam Arabi, head of Shuaa Capital’s Asset Management & Portfolio Advisory Services told Arabian Business. “It’s a great deal for NBO because CBQ will inject a lot of cash into the bank and it could start a new chapter in the bank’s chequered history,” he added. Since the initial deal CBQ has proposed to acquire 17.92 million additional NBO shares from the secondary market, which would take its total stake in NBO up to 34.9%. The move is subject to regulatory approvals and will follow the conclusion of the private placement deal. Earlier this year NBO was forced to call off its proposed merger with BankMuscat because of problems the two parties had in reaching an agreement on NBO’s net worth. The proposed merger, which analysts claimed lacked transparency had been in doubt for months because of alleged improper and unethical practices during the 1990s. “This has been a fairly transparent deal and everyone has pretty much been able to see what is happening,” said Arabi. “It is quite different than the BankMuscat deal, which was under a lot of pressure,” he added. At present, the 34.5% Suhail Bahwan Group Holding-owned NBO’s capital comprises 70 million shares. NBO’s market capitalisation currently stands at around US$813 million. The 27.92 million NBO shares, which will be acquired by CBQ if the deal goes ahead, are valued at some US$324 million. It is not yet clear whether CBQ will look to take a controlling interest in NBO in the future. However, the possibility of the Doha-based outfit managing the Omani bank has not yet been ruled out. “Perhaps CBQ will manage NBO, but nothing official has been said about that possibility yet,” said Arabi. “The way CBQ sees it is that NBO has a lot of potential, but nothing has been said about them having a controlling say,” he concluded. The move comes as respite for the Muscat-based bank, which is alleged to have been riddled with corruption for years.

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