Oman’s Bank Sohar, in talks to merge with larger rival Bank Dhofar, plans to issue a OMR70 million rial ($181.8 million) mandatory convertible bond to boost its capital reserves, it said on Wednesday.
The issue, which will be done as a private placement, will help boost the bank’s Tier 1 – or core – capital, the lender said in a bourse filing. It did not provide any other details.
Bank Sohar’s Tier 1 ratio was 9.85 per cent at the end of the first quarter, with its total capital adequacy ratio – combined Tier 1 and Tier 2 (or supplementary) capital – at 13.28 per cent, according to its financial statement.
By comparison, the median Tier 1 capital ratio in the Omani banking system was 11.97 per cent at the end of 2013, according to Thomson Reuters data.
Last month, Bank Sohar reported a 31 per cent year-on-year jump in first-quarter net profit.
It has been in discussions with Bank Dhofar since the middle of last year about a merger that will create Oman’s second-largest lender.