British bank HSBC Holdings  and Oman International Bank are in discussions for a potential merger of HSBC'S Oman operations with the Gulf lender, OIB said on Thursday, without giving any further details of how a deal could work.

"These discussions are ongoing and no decision has been made as to whether to recommend proceeding with any transaction," OIB said in a bourse statement which did not give any further details.

HSBC was not immediately available for comment in Dubai.

HSBC, which has operated in Oman since 1948, has five retail branches in the sultanate. The head of its securities business was quoted by Omani media this week as saying the British lender had a long-term commitment to Oman and the Middle East.

OIB shares closed 0.8 per cent higher on the Muscat bourse prior to the announcement. – Reuters