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Decision on merger of UAE’s largest mortgage companies expected soon

Liquidation of Amlak Finance and Tamweel is now not an option, with a merger the most likely outcome although leaving the troubled companies to sort themselves out is still a possibility.

Merger talks between the two companies began in November last year as credit began to dry up because of the global financial crisis. But although it is the favoured option it is not a certainty, said Sultan Bin Saeed Al Mansouri, Minister of Economy.

'A merger is one of the good options to look. But it has its pros and cons also. The other option is not to merge them, to keep them separate and let each address the issue separately,' he said.

He confirmed that the third option of liquidation is no longer being considered. But it would appear that the steering committee in charge of examining the options has made its recommendation and a decision is awaiting final approval from the government.

'Recommendation to the government has been already forwarded and we are waiting for the final approval,' Al Mansouri added.

The committee reviewed all aspects of both businesses and submitted a comprehensive report. But it would appear from Al Masouri's comments that a merger is not a foregone conclusion.

The government has approved a merger of the Real Estate Bank with the Industrial Bank, creating a new development bank with Dh10 billion capital. The new bank is to finance industrial companies and real estate developers.

The Industrial Bank is majority owned by the federal government and several national banks have minority stakes.

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