Merger to create Islamic realty bank
Federal Government expected to decide on the merger of the two UAE mortgage lenders.
Dubai: Amlak Finance and Tamweel, the UAE mortgage lenders being reorganised by the Federal Government, may be merged into a new Islamic bank, Sultan Bin Saeed Al Mansouri, Minister of Economy, told Dubai Television on Friday.
"The final proposal is to have an Islamic bank that operates like any other Islamic lender but with a bigger focus on property finance," he said. "The federal government will have a capital contribution."
Amlak and Tamweel's investors may own a third of the new bank, while the Federal Government and Dubai Government may share the remaining stake equally, Al Mansouri said. The proposal, which requires approval from the Council of Ministers, may be passed before the end of this year, he said.
Block
Amlak and Tamweel, both of which operate in line with Sharia, were the UAE's two biggest mortgage lenders before the seizure of global credit markets blocked their access to new funding. Shares of the two companies have been suspended since November.
Both companies posted a second-quarter loss after setting aside cash for financing provisions. Revenue also slumped after property prices tumbled.
Amlak's net loss excluding minority interests was Dh65.6 million ($17.9 million) while Tamweel posted a loss of Dh35 million after booking impairment provisions of Dh89.2 million.
Tamweel Chairman Shaikh Khalid Bin Zayed Al Nahyan said in May the Federal Government will provide only the initial funding for the two companies and they will have to rely on the market later.
Amlak and Tamweel must have the option to collect retail deposits "otherwise it will end up at the same problem that created it in the first place", he added.
Amlak and Tamweel both accept wholesale deposits from companies and have applied to the Central Bank for a retail banking licence.
The final proposal, which has initial approvals from the government, will be put to investors for a vote, Al Mansouri said. If all goes according to plan, the implementation of the decision will start early next year, the minister added.
