Dubai: Dubai Islamic Bank (DIB) announced on Wednesday it had settled all bilateral liabilities of Tamweel two years ahead of scheduled maturity.
In a press release the Dubai bank said it had settled approximately Dh4 billion of Dubai-based real estate developers liabilities.
“This move is a key milestone in bringing us closer towards the culmination of our strategy for Tamweel” Dr. Adnan Chilwan, CEO at Dubai Islamic Bank, stated.
The bank stated that robust capitalisation and ample liquidity was the reason behind the early repayment.
The liability obligations were a part of a 5 year agreement with creditors made back in 2010.
The obligations were set to mature in October 2015.
Back in 2010 Dubai Islamic Bank increased its stake in Tamweel to 58 per cent following the backing by the Government of Dubai, Central Bank of UAE, Ministry of Economy, and Securities & Commodities Authority (SCA) among others.
Since late 2010 Dubai Islamic Bank has implemented a “well-defined” strategy to establish and “efficient operation” within Tamweel, the press release stated.
The bank also set out to offset liquidity constraints faced by the real estate developer at the time.
The press release stated that Tamweel was able to return to the market in an improved competitive position once funding constraints were removed.
“Right from the onset, we had a very clear vision with respect to the franchise which effectively revolved around three core areas - stability of operations, rationalization of costs and return to profitability,” Dr. Chilwan, stated.
More recently, following a take over and merger of operations the entire mortgage business is now funded by Dubai Islamic Banks balance sheet.
“Creating an efficient balance sheet is a critical component of Dubai Islamic Bank’s growth strategy. Given our significant liquidity and low cost of funds, the early repayment is perfectly aligned towards progressively building an even more effective and efficient business,” Dr. Chilwan stated.
In March 2013 Dubai Islamic Bank announced a tender offer to acquire outstanding Tamweel shares, following the real estate developers return to a “growth orientated, profitable franchise,” the press release stated.
The bank now owns close to 90 per cent of the entity and has initiated the process to delist the company from Dubai Financial Market.
Chilwan stated that with the process of delisting initiated, Tamweel operations have now been completely merged with Dubai Islamic Bank.
