The Dubai government wants to reactivate Amlak and Tamweel as two independent companies before they can be merged as one entity, according to Nasser bin Hassan Al Shaikh, Director-General of Dubai's Department of Finance and Chairman of Amlak Finance.
He confirmed that the priority is to reactivate the two companies so both firms can start to offer mortgages once again before working on the merger. 'It makes sense because Amlak and Tamweel, which represent more than 60% of the mortgage industry in Dubai, are very important to the real estate market,' he said.
He said that there is a common agreement between the two boards and the two management teams, and at the end it will be the shareholders decision. Liquidation has been ruled out as an option.
A key is to ensure that the merged company will have enough liquidity. The issues on acquiring limited banking licences as well as the rescheduling of debt are currently being discussed by a ministerial committee chaired by the UAE Minister of Economy Sultan bin Saeed Al Mansouri.
The merger, when it eventually comes, will have taken some time. It was last October when the two companies announced they were in merger talks. At the time, just when the severe downturn in the real estate market was hitting Dubai, it was claimed that the merger would create a financial powerhouse with a balance sheet in excess of Dh27 billion.
In November it was announced that the two would come under the umbrella of the Real Estate Bank. But this did not go forward and is no longer being discussed.
The plan is that the two firms will be back in the market shortly as independent Islamic mortgage lenders. However, asked how soon after that a merger would take place, Al Shaikh was unable to give a date.
Some insiders believe that it won't happen. 'The merger could be decided at a later date. It will be up to the government to decide but it is by no means certain,' one official said.
