Takeover raises Oman bank competition concerns

Deal still needs official approval

Sohar bought HSBC Oman in 2023

Oman’s second-largest lender by assets, Sohar International Bank, has secured approval from a smaller rival, Ahli Bank, for it to acquire Ahli.

The takeover comes as concerns are raised that consolidation in the country’s banking sector could limit choice and competition, and raise costs for customers.

Ahli Bank, which was set up in 2007, said in a statement that it had accepted Sohar’s purchase proposal. No financial details were made available.

“This is about the survival of the fittest where small banks get absorbed by bigger ones,” Khalifa Jaidi, a retired financial adviser with Al Omaniya Financial Company, told AGBI. 

“We have to be careful that we do not end up with fewer banks that dictate the financial terms by limiting the number of lenders.”

Another observer, Mohammed Al Suleimani, a financial adviser at Oman Business Forum, said: “Let’s hope there will be no more mergers.

“Customers will have limited excess to financial services. That may create financial instability in the country and may increase the costs of credit to small businesses, to limit their growth.”

The deal would be Sohar International’s second acquisition in less than two years, after it took over HSBC Bank Oman in 2023.

If the Ahli Bank deal, which still needs regulatory approval, goes through, it will increase Sohar International’s assets by around 50 percent to more than OR11 billion ($30 billion) from about OR7.4 billion now. That is still short of Bank Muscat, the country’s biggest bank by assets.

National Bank of Oman and Bank Dhofar are the next biggest banks by assets.

Banks in Oman recorded a 15 percent year-on-year rise in profits in 2024 to OR523 million. 

Register now: It’s easy and free

AGBI registered members can access even more of our unique analysis and perspective on business and economics in the Middle East.