Oman Arab Bank and Alizz Islamic merger ‘credit positive’: Moodys

The potential merger of Oman Arab Bank (OAB) and Alizz Islamic Bank would be credit positive for OAB and would have total assets worth $7.6 billion, according to Moodys.

“Successful completion of the proposed merger would provide OAB with a larger Islamic franchise and asset base, allowing it to improve its interest income and deposit-gathering ability,” noted the report.

OAB, with a seven percent market share in terms of total assets (conventional and Islamic), is larger than Alizz, at two percent. However, Alizz has a larger share of the Islamic assets market at 15 percent as of the end of 2017, compared with two percent for OAB.

The banks have agreed that Alizz would continue to operate as a dedicated Islamic banking franchise with management autonomy which, according to Moodys, would help preserve Alizz’s customer relationships.

Earlier this month, the two listed banks signed a memorandum of understanding (MoU) to continue talks on an intended merger between the two parties.

Low oil prices and the decline in economic and credit growth in the GCC countries in recent years have given rise to increasing merger activity in the region’s banking sector.