Merger of key property lenders in Dubai to move forward rapidly

Dubai Islamic mortgage providers Amlak and Tamweel aim to complete their $1.6 billion merger rapidly as the global credit crisis strikes the Gulf.

Both firms are facing medium and long term funding problems which are regarded as a sign of how the global finance crisis is now affecting Dubai. More real estate developers and lenders in the region are expected to follow similar plans and merge.

The two firms' chief executives said they expect to complete the merger, first unveiled earlier this month, by the end of the first quarter of next year as they seek government assistance to help them through the crisis.

'We're expecting to go through the approval process by the end of the year. By the end of the first quarter 2009 we are expecting the merger to go through,' Tamweel's chief executive Wasim Saifi said.

The Amlak-Tamweel merger will be the biggest in Dubai since Emirates NBD, the largest Gulf lender by assets, was formed last year in an $11.3 billion government-brokered merger between Emirates Bank International and National Bank of Dubai.

Saifi said the two companies are in discussions with the government over medium and longer-term funding options, adding that Tamweel had no problems for short-term funding.

It is a similar situation for Amlak. 'We have access to corporate deposits but these are short-term funding. It has become increasingly difficult to tap into international capital markets. We are talking with the government to find medium- to long-term solutions,' said chief executive Arif Al Harmi.

The two institutions have begun consultation with key stakeholders, including the Investment Corporation of Dubai (ICD) as representative of the Government.

All key stakeholders have reaffirmed their strong support for the merger.

'The two companies form an integral part of the Government of Dubai's Strategic Plan, and are of critical importance to the economic development of the UAE, particularly its real estate sector,' said Ebrahim Al Shaibani, Chief Executive Officer of ICD.

'Amlak Finance and Tamweel have been instrumental in developing the UAE housing finance market and have a strong track record of bringing innovative products to meet the needs of the market,' he added.