Oman International Bank (OIB) is in the early stages of talks on a merger with British bank HSBC Holdings' operations in Oman, said its chairman.

'OIB is in early stages of negotiations about a merger of its business with HSBC's Oman operations. We are not discussing buying HSBC's business in Oman,' said Ali Juma.

'If the negotiations proceed to an agreement, it will lead to a merger.'

An OIB official had earlier described the talks as an acquisition by OIB of HSBC Oman, as the British lender looks to streamline its Middle East presence.

Both HSBC and OIB had earlier issued statements saying the two parties were in talks about 'merging their operations' in Oman without providing additional details.

HSBC is reviewing its Middle East operations, with the UAE becoming a regional hub and other countries having their operations reduced.

The reorganisation is affecting Oman, as well as Bahrain, Jordan, Lebanon, Qatar and the UAE.

HSBC has operated in Oman since 1948 and 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.

Oman opened its doors to Islamic banking and let conventional lenders run Sharia-compliant operations in May.-Reuters