The State Bank of Pakistan (SBP) has given the green light to the merger of HSBC Bank Oman operations in Pakistan with sharia-compliant Pakistani lender Meezan Bank.

The in-principle approval from SBP would enable Meezan Bank to carry out other formalities required for the merger such as securing its shareholders’ nod.

The state bank said that the approval should not be construed as final approval, adding that "SBP at time of final approval may also impose any condition as deemed appropriate."

The Islamic banking unit of SBP is currently reviewing the conversion of HSBC Bank Oman’s conventional portfolio into the Islamic modes.

The merger is subject to necessary laws, rules as well as Shariah standards.

HSBC Oman announced in November 2014 that it is in talks with Meezan Bank for the possible sale of its Pakistani business.

The unit, comprising one branch, managed gross assets of PKR4.1bn at the end of the first quarter of 2015.