Tamweel, Amlak merger seen in Q1 2010

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MERGER PLAN: The UAE government said it intended to merge Amlak and Tamweel in November 2008.(Getty Images)

The long-planned merger between troubled Dubai mortgage firms Tamweel and Amlak is expected to be completed in the first quarter of 2010, Tamweel's chairman said on Friday.

"The annual general meeting is the end of the year, Q1 will be the right time for it," Sheikh Khaled bin Zayed al-Nahyan said on the sidelines of a World Economic Forum meeting in Dubai.

He also said Tamweel's default rate had retreated from a peak of 3 percent recently and "has been coming lower".

The UAE government said it intended to merge Amlak and Tamweel in November 2008 and has been working on a plan to restructure the two firms.

The merger between the two lenders has been under review by a federal government committee since November 2008, when the United Arab Emirates said it would merge the Islamic firms with two state-controlled banks.

The building boom in the UAE, centred on the emirate of Dubai, has unravelled since the global financial crisis froze credit and sent the economy into a downturn.

Tamweel and Amlak have been suffering from a dearth of liquidity, absent or minimal property-related income and deteriorating asset quality as both were paralysed by the property collapse that hit Dubai last year.

Like many other banks and mortgage finance companies, Tamweel was forced to raise its provisions for bad loans and saw defaults on home loan payments.

Tamweel's chairman said on Friday that its default rate had retreated from a peak of 3 percent recently and "has been coming lower".

He added that the mortgage lender had taken "around 400 million dirhams" ($109 million) in provisions over the past 18 months.

Sheikh Khaled, who is a member of the ruling family of Abu Dhabi, the largest in the seven-member UAE federation, said he expected shares in the merged company to begin trading once the tie-up was completed.

Tamweel and Amlak's shares have been suspended since November 2008.  (Reuters)

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