Bank Nizwa SAOG has submitted a non-binding letter of intent to acquire the entire share capital of Alizz Islamic Bank SAOC from Oman Arab Bank SAOG at an indicative valuation of 1.2 times book value, the Omani lender disclosed in a Muscat Stock Exchange filing published through the Financial Services Authority's news portal on Sunday.
The proposed transaction would be structured as an acquisition followed by a merger by incorporation of Alizz into Bank Nizwa, creating a consolidated Islamic banking champion in the Sultanate, according to the filing. The absolute deal value was not disclosed in the market notice.
STRUCTURE AND FUNDING PLAN
Under the proposal outlined in the market disclosure, Bank Nizwa would first acquire 100% of Alizz Islamic Bank and would then complete a legal merger by incorporation with the target folded into the buyer. Alizz Islamic Bank is currently a subsidiary of Oman Arab Bank SAOG, one of Oman's larger conventional lenders, and its full sale would represent a substantial simplification of the group structure.
Funding for the transaction would combine two principal instruments. Bank Nizwa proposes to issue perpetual Additional Tier 1 sukuk and to raise fresh equity through new shares subscribed by Ominvest, the Omani investment company. If completed on the terms proposed, Ominvest could end up holding as much as 20% of Bank Nizwa's issued share capital, materially changing the buyer's shareholder register.
The indicative valuation of 1.2 times book value was included in the letter of intent, though Bank Nizwa did not disclose an absolute deal value in its market notice. The proposal remains non-binding at this stage and is subject to further due diligence and negotiation between the parties before any definitive documentation could be signed.
REGULATORY APPROVALS REQUIRED
Any binding transaction would be subject to approval from the Central Bank of Oman and from the shareholders of both banks, the filing noted. Islamic banking mergers in the Gulf region typically face a lengthy multi-stage regulatory review covering prudential considerations, competition and Sharia governance requirements, each of which involves separate submissions and workstreams.
The move would consolidate two of the standalone Islamic banks operating in Oman into a single institution and would rank as one of the more significant sector transactions in the Sultanate since the introduction of the Islamic banking regulatory framework. Bank Nizwa was itself established as the country's first dedicated Islamic bank and has grown into a systemically important lender in that segment.
For Oman Arab Bank, the disposal of Alizz Islamic Bank would represent a strategic simplification of its group structure. The lender has not yet publicly confirmed its position on the non-binding offer, and the letter of intent leaves scope for further discussion of price, structure and other commercial terms before any definitive agreement is signed. A response through the same market disclosure channel would be the normal route for the seller.
Bank Nizwa emphasised in its notice that the letter of intent was non-binding and that no assurance could be given that a transaction would proceed. The market notice is the first formal step in a process that would ordinarily involve confirmatory due diligence, negotiation of binding documentation and the regulatory approvals now under way with the Central Bank of Oman and other authorities.
For the Omani banking sector, the proposal signals an appetite for consolidation among Sharia-compliant institutions and could reshape the competitive landscape if the parties eventually reach a binding agreement. Ominvest's potential 20% stake in the enlarged Bank Nizwa would introduce a strategic anchor investor alongside the existing shareholder base, aligning the funding of the deal with a broader recomposition of the buyer's ownership structure.