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Amlak eyes bond sale after bank licence rebuff
Mortgage lender Amlak Finance said yesterday the central bank had rejected a request for a banking licence and the company was considering an Islamic bond sale as another way of raising funds.
- Reuters
- Published: 00:00 April 2, 2007
Dubai: Mortgage lender Amlak Finance said yesterday the central bank had rejected a request for a banking licence and the company was considering an Islamic bond sale as another way of raising funds.
A bank licence would have allowed Amlak, the UAE's largest mortgage lender by market value, to collect deposits, driving down capital costs and letting the company offer cheaper mortgages.
The company's stock, which had rallied when the application was announced last year, fell 8.28 per cent yesterday. The shares have tumbled more than 40 per cent this year.
Expansion
Shahli Akram, Amlak's deputy chief executive, declined to say why the application had been rejected.
Amlak would raise funds through Islamic bonds, or sukuk, he said. Amlak had planned a $300 million sale of asset-backed securities, which Akram said would happen in the third quarter.
"We had hoped to get [the licence] but it will not impact us much," he said. "We have alternative funding options such as issuing sukuk."
Amlak had hired Standard Chartered for the sale but had not finalised other details of the offering, he said.
Amlak planned to apply for licences to sell mortgages in Syria and Pakistan after moving into Egypt and Saudi Arabia this year, Shahli said.
"They are opening markets and there are significant reforms by those governments to increase foreign investment," he said. "We are seeing an increasing need for sharia-compliant finance."
Amlak has followed parent-company Emaar Properties in expanding abroad as competition increases in the UAE property market.
"We do see saturation taking place in this market," Akram said. "It will make it harder to keep the same margins and market share."
Amlak made its smallest quarterly profit in more than two years in the fourth quarter after costs rose on expansion into Egypt and recruitment.
Amlak's relationship with Emaar was still strong despite last week's announcement that Emaar chairman Mohammad Al Abbar was stepping down from Amlak's board.
"It's a normal process," he said. "You will see board turnover."
He declined to comment on the reasons for the change.
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