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OMAN: In an
interesting turn of events in what would have been a straightforward
consolidation exercise, Bank Nizwa’s proposal to merge with United Finance
Company (UFC), which was previously agreed in-principle, now hangs in the
balance as UFC has decided to open the merger and acquisition bidding
process to two other financiers: National Bank of Oman and Al Omaniya
Financial Services.
At OMR253 million (US$655.02 million), Bank Nizwa is the largest
fully-fledged Islamic bank in Oman by total assets, coming in a close
second to Bank Muscat’s Islamic window, Meethaq, which has almost OMR300
million (US$776.8 million) in assets as at the end of 2014. The
amalgamation with UFC, the largest non-banking financial institution in the
country with almost OMR120 million (US$310.68 million) in assets, would
likely change the dynamics of the Omani Shariah banking landscape giving
Bank Nizwa a boost to lead ahead of the other seven Islamic banking players
in the Sultanate.
In the three months following the announcement of UFC’s in-principle
agreement with Bank Nizwa, Al Omaniya and NBO threw in their hats with
similar propositions which have led UFC to reconsider its initial deal with
Bank Nizwa. “In the best interest of the shareholders of the company, the
board of directors of UFC has now decided and communicated with Bank Nizwa,
Al Omaniya and NBO enquiring if they would be interest[ed] in participating
in a bidding process for merger/acquisition,” said the non-banking
financial institution yesterday.
Despite its relative youth, the Islamic banking industry in Oman is growing
fast. Islamic banking assets accounted for 5% of the Sultanate’s total
banking assets as at the end of January, according to central bank data,
and this figure is expected to more than double in the next few years. The
potential expansion of the country’s first Islamic bank is likely to
contribute to this growth. It will be exciting to see how the situation
unfolds in the coming weeks.
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