Abu Dhabi: The Industrial Bank is to be merged with the Real Estate bank, creating a new development bank with Dh10 billion in capital, a top official told the Federal National Council on Tuesday.
Obaid Humaid Al Tayer, Minister of State for Financial Affairs, told the House the merger is expected to be finalised by summer, creating the Emirates Development Bank.
In effect, the government is merging the Industrial Bank with three other financial institutions to create a state-backed mega-bank aimed at reviving lending to property buyers and developers.
Late last night, the Ministerial Council for Services approved the merger of the Industrial Bank with the Real Estate Bank, which had earlier been combined with Amlak Finance and Tamweel, the country's two largest home loan companies, which have both been severely affected by the credit crisis.
Al Tayer said the merger was urgently required, adding that the new bank would finance industrial companies and real estate developers.
"It will extend facilities whenever needed," he said.
The Industrial Bank is majority owned by the federal government and several national banks have minority stakes.
Al Tayer added that the decision to merge the two leading home finance providers with two state banks was in line with a worldwide trend for governments to step in to support critical industries in the wake of the credit crisis.
With the advent of the new Emirates Development Bank, which analysts say will have access to federal funds, the nation's home finance sector may be in a stronger position to weather the slowdown. It will also be in a strategic position to grow in the region.
Committee completes review
Abu Dhabi/Dubai: In a crucial step intended to strengthen the mortgage sector, the Cabinet-appointed Steering Committee said on Tuesday it had completed its review of Amlak and Tamweel and will submit a comprehensive report to the Government on the country's largest mortgage lenders.
Headed by Sultan Bin Saeed Al Mansouri, the UAE Minister of Economy, the Committee will recommend several alternative strategies with respect to the future of Amlak and Tamweel.