HSBC’s proposed merger of its Omani business with Oman International Bank has been halted by the Gulf Arab state after a creditor of the British bank filed an objection to the tie-up citing a pending lawsuit.
HSBC, Europe’s biggest bank, said in April it will merge its Omani business with OIB and retain a 51-percent stake in the expanded operation.
Oman’s Ministry of Commerce and Industry issued an order temporarily suspending the merger until the lawsuit filed by a businessman is settled or withdrawn, a source familiar with the matter said on Thursday.
The businessman has a compensation claim of 2 million rials ($5.20 million) against the bank, according to a local newspaper in Oman, and filed an objection with the ministry, citing the ongoing legal case.
“Any objection in Oman has to be heard by the court for validity. That’s the reason the ministry issued a temporary halt,” a source told Reuters, speaking on condition of anonymity.
In an emailed statement Thursday, HSBC said the merger was proceeding according to relevant laws and regulations.
“Such objections are unexpected when mergers significantly increase the combined assets,” a spokesman for the bank said.
OIB shares were suspended from trading on Thursday as the bourse sought a clarification from the lender on merger being halted.
OIB is Oman’s fifth-largest bank, with the second-largest branch network in the country and gross assets of $3.2 billion. The merger was slated to close in the second quarter and HSBC was planning to inject additional capital of up to $97.4 million from internal resources into HSBC Oman, as part of the deal.
HSBC is pulling back from countries where it is unprofitable or lacks scale, and restructuring operations elsewhere, and has been reviewing its Middle Eastern operations, Reuters reported.
