Amlak denies merger due to funding difficulties

Dubai mortgage lender says proposed merger with Tamweel will drive growth plans.
Amlak denies merger due to funding difficulties
MERGER PLAN: Amlak has denied its proposed merger with Tamweel is due to funding difficulties. (Getty Images)
By Dylan Bowman and Reuters
Sun 05 Oct 2008 10:42 AM

Dubai-based mortgage lender Amlak Finance said on Sunday a proposed merger with rival Tamweel would enable it to pursue growth plans both locally and abroad, but denied any funding difficulties.

"We believe that the combined entity will enjoy increased financial strength, size and scale to pursue the significant growth plans in the domestic and regional markets," the firm said in an emailed response to questions sent by newswire Reuters.

In response to a question on whether it was facing any difficulties in access to funding, the company said: "No".

"The real estate sector in the region has never been greater and the markets are expected to experience continued strong growth in the years to come," it added.

Amlak and Tamweel, Dubai's two leading Islamic mortgage lenders, announced on Saturday the pair had begun talks over a possible merger.

The companies said they have begun "exploratory discussions" and a joint steering committee has been set up to oversee the merger.

The pair said that subject to successful negotiations and applicable shareholder and regulatory approvals the merger would be expected to close in early 2009.

Goldman Sachs International is advising on the merger, they said.

The announcement comes a week after the Arabic Al Khaleej daily reported that three mergers among major UAE banks and real estate firms are close to being finalised.

The newspaper did not name the companies involved but said six major firms listed on both the Dubai and the Abu Dhabi bourses would be involved in the consolidation.

Both Amlak and Tamweel are listed on the Dubai Financial Market (DFM), which has been closed since Monday for Eid Al-Fitr.

Amlak's share price is down 35.67 percent so far this year, while Tamweel's is down 44.53 percent. Dubai's main index is down 30.42 percent year-to-date.

Tamweel's shares plummeted 35.15 percent last month, driven down by the ongoing corruption scandal that has seen several former senior executives arrested and the fallout from the US financial crisis.

Faced with growing competition from global players, banks in the world's biggest oil-exporting region have already begun consolidating to help them better compete and diversify revenues.

Emirates NBD, the largest Gulf Arab lender by assets, was formed last year in an $11.3 billion government-brokered merger between Emirates Bank International and National Bank of Dubai (NBD).

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