Building on a disclosure made on June 19, 2022, and to subsequent discussions between HSBC Bank Oman SAOG (HSBC Oman) and Sohar International Bank SAOG (Sohar International), the Board of Directors of HSBC Oman agreed to enter into a non-binding memorandum of understanding (MoU) with Sohar International.

The MoU, which is dated July 25, 2022, pertains to proceeding to exclusive discussions in relation to the possible merger between the two entities on the basis of a merger by incorporation whereby HSBC Oman would be dissolved and its shareholders offered a consideration valuing HSBC Oman at 1.0x book value.

The consideration will consist of shares of Sohar International with the option for the shareholders of HSBC Oman to elect to receive the consideration in cash, provided that the maximum cash consideration payable by Sohar International to the shareholders of HSBC Oman (that elect to receive cash consideration) shall not exceed 70 per cent of the total consideration payable by Sohar International.

The shares of Sohar International that would form part of the consideration to the shareholders of HSBC Oman would value Sohar International at 1.0x book value.

The respective book value of each bank would be calculated at a later date.

The ongoing exclusive discussions, negotiations and the potential merger shall remain subject to due diligence and entry into definitive agreements, in addition to obtaining final approvals from the banks’ respective Boards, Regulators and Shareholders.

HSBC Oman has been informed by HSBC Group, its major shareholder, of its intention for HSBC Bank Middle East Limited (“HBME”) to establish a new wholly-owned banking branch in Oman.

If the proposed merger discussions were to lead to a binding agreement, HBME would then request regulatory approvals for the setup of this new branch.