BankMuscat claims to be open to merger talks
Mergers are the talk of the day in the Oman banking industry after a BankMuscat official admitted the bank was open to consolidation talks
Talk of mergers has come to the fore again in the Middle East banking industry with BankMuscat admitting it’s open to merger talks. With the rumour-mill in Oman already spreading word of a possible merger between Oman International Bank (OIB) and National Bank of Oman (NBO), the news that BankMuscat is looking to further consolidate its position will no doubt provide a boost to the banking sector.
BankMuscat already completed a merger with Commercial Bank of Oman last December, and now an official revealed it was open talks with any of the local banks in Oman, regardless of size. The news will be welcomed by the Central Bank of Oman, which has been encouraging banks to merge to remain strong enough to stonewall any buy-out moves by larger overseas banks in the new WTO context.
But while the rumour-mill circles about possible mergers, history suggests otherwise. Some believe that the potential merger between OIB and NBO will go the way of the recent collapsed talks in the UAE between Emirates Bank International and National Bank of Dubai. It has been suggested that the groups behind OIB and NBO are ‘too strong’ to come to an understanding on the issue of a merger.
That’s a common problem in the Gulf where consolidation is unpopular in the banking sector as owners are reluctant to relinquish any control or autonomy. But a report by Moody’s last year insisted that banks in the region needed to turn to consolidation if they are to survive the imminent de-regulation that entry to the WTO will undoubtedly bring.
BankMuscat is already planning for such eventualities by embracing mergers, but also by its foreign policy. The bank is doing its best to spread its wings to countries like the UAE and India. It already has a branch in Bangalore and has plans for another in Mumbai. Meanwhile recent reports from the UAE suggest there is hope for BankMuscat to finally succeed in its application for a branch license, which it submitted two years ago.