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HSBC Unit to Discuss Merger Offer With Sohar International

·3-min read

HSBC Bank Oman, a unit of HSBC Holdings plc HSBC, has agreed to hold preliminary talks with Sohar International Bank after the latter showed interest in merging with HSBC. Last week, Sohar International held out the possibility of a cash-and-shares deal to merge with HSBC Bank Oman.

Sohar International stated, “The board of directors of Sohar International (SIB) in its meeting held on June 15, 2022, resolved to send a letter of intent to the Board of Directors of HSBC Bank Oman (HSBC Oman) to explore the possibility of a merger between the two entities, in a deal which would involve HSBC Oman shareholders being offered cash and shares – subject to obtaining final approvals from the respective boards, regulators and shareholders.”

HSBC Bank Oman said that it considered the letter of intent it received from Sohar International and, thus, agreed to engage in preliminary discussions to obtain more information on the possible offer.

The bank said, “If the parties agree to proceed with the merger, it will be subject to various conditions including ... approval of the relevant regulatory authorities and of the shareholders at the extraordinary general assembly of each bank.”

Notably, there has been an increase in consolidations within the banking sector across the Gulf region as lower government spending has squeezed profit margins. Banks are, thus, trying to scale up to become more competitive regionally.

Our Take

In order to improve operating efficiency, HSBC has been planning to restructure its operations. In February 2020, the bank announced its transformation plan, which is aimed at reshaping underperforming businesses, simplifying complex organization and reducing costs.

Moreover, HSBC has been undertaking measures to bolster its performance with special focus on building operations in Asia, including Hong Kong and China. In sync with this, the company acquired 100% of the issued share capital of AXA Insurance in Singapore for $529 million this February and agreed to acquire L&T Investment Management Limited for $425 million.

The bank also started an exclusive fund focused on the metaverse for its private banking clients in Hong Kong and Singapore. Moreover, HSBC intends to position itself as a top bank for high net worth and ultra-high net worth clients in Asia.

Over the past year, shares of HSBC have gained 4.2% against a decline of 14.4% recorded by the industry.

 

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Currently, HSBC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Inorganic Growth Moves by Other Firms

With a view to help clients build long-term financial wellness, Truist Financial Corporation TFC acquired the award-winning gamified finance mobile app, Long Game. Long Game changes the way people engage with their banks. The mobile finance app uses prize-linked savings and casual gaming to motivate smart financial behavior.

Truist Financial is expected to use Long Game’s innovative technology to inspire and build better lives and communities.

Franklin Resources, Inc. BEN, which operates as Franklin Templeton, entered an agreement with The Bank of New York Mellon Corporation BK to acquire BNY Alcentra Group Holdings, Inc. from the latter. The closing of the deal, subject to customary conditions, including certain regulatory approvals, is expected early in the first quarter of 2023.

Through the acquisition, Franklin Templeton’s U.S. alternative credit specialist investment manager, Benefit Street Partners, will be able to expand its alternative credit capabilities and presence in Europe, doubling its AUM to $77 billion globally.

Upon the deal closure, BNY Mellon Investment Management is expected to continue to offer Alcentra’s capabilities in BNY Mellon’s sub-advised funds and select regions via its global distribution platform, and will provide Alcentra with ongoing asset servicing support.


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