Dubai Islamic Bank raised its stake in Islamic mortgage firm Tamweel to 57.33 percent, Dubai's government said on Sunday, in a move that will help revive lending in Dubai's battered property market.
Dubai Islamic Bank, the emirate's third-largest bank by market value, had said in June it may increase its one-fifth stake in Tamweel.
"The deal effectively renders Tamweel a subsidiary of Dubai Islamic Bank which is now its biggest shareholder at 57.33 percent," the government of Dubai media office said in a statement.
"This strategic move is the culmination of intensive efforts over the past few months to resolve the stalemate at Tamweel that will allow the company to resume its core activity of providing mortgages and real estate financing," it added.
The statement, however, did not provide a value for the deal.
The deal is also likely to put an end to a long-planned merger between Tamweel and rival Islamic mortgage lender Amlak.
The United Arab Emirates government said in November 2008 it intended to merge Amlak and Tamweel and has been working on a plan to restructure them. Shares in the two have not traded since.
Investors had been awaiting the merger to kick start lending in Dubai, where house prices fell some 60 percent since their peaks in 2008, billions of dollars worth of projects were put on hold or cancelled, and lending all but dried up.
In December, the Dubai government said if formed a judicial committee to protect creditors and companies related to Amlak and Tamweel, in what was seen as a bid to boost transparency. (Reuters)