Dubai Islamic mortgage lender Amlak has suspended new loans, its chief executive said on Wednesday, as the global credit crunch hits the property sector in the Gulf's trading hub.
"We are reviewing our existing credit policy to ensure optimum servicing of existing and prospective accounts... hence our temporary measures of not sourcing new applications will bring us up to the level we have outlined in our management strategy," Arif Alharmi said in a statement.
Dubai faces a slowdown in loan growth and real estate activity as it grapples with the fallout from the global financial crisis.
Emaar Properties, Dubai's largest listed developer, said last week it was giving its customers more time to repay their mortgages as liquidity constraints in the local banking sector has exacerbated the problems of securing home finance.
Emirates NBD, the UAE's largest bank, has halted retail lending to foreigners employed by top Dubai property firms on fears the slowdown could jeopardise their jobs and income, according to an internal document obtained by newswire Reuters, although the bank denied the move.
Amlak and fellow mortgage lender Tamweel are aiming to complete a $1.6 billion merger by the end of the first quarter of 2009 despite the crisis which has almost frozen global and regional interbank lending and stalled medium to long-term financing.
Speaking at a bankers' meeting earlier on Wednesday, Amlak chairman Nasser Al-Shaikh said the company may need to access retail deposits in some form.
Al-Shaikh said home finance across the world had been "challenged" and that the existing business plans were no longer sustainable and had to be changed.
"They don't have to become banks but something similar to the savings and loans model in other countries," Al-Shaikh said, adding that Amlak was working closely with the UAE's central bank and finance ministry to bring in the changes. (Reuters)For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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