Amlak, Tamweel in merger talks

UPDATE 2: Leading Islamic mortgage lenders have begun 'exploratory discussions' over merger.
Amlak, Tamweel in merger talks
MERGER TALKS: Amlak and Tamweel have begun exploratory discussions for a possible merger. (Getty Images)
By Dylan Bowman
Sat 04 Oct 2008 04:45 PM

Amlak Finance and Tamweel, Dubai's two leading Islamic mortgage lenders, have begun talks over a possible merger, the companies said on Saturday.

Amlak and Tamweel 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 companies said the merger would create "meaningful" operational and financial synergies and give the combined entity the increased financial strength, size and scale to pursue "significant" growth plans in domestic and regional markets.

Amlak chairman Nasser bin Hassan Al-Shaikh said the combined company would have a balance sheet in excess of 27 billion dirhams ($7.35 billion).

The merger will "serve as a financial powerhouse with the increased critical mass required to lead the region’s real estate finance markets to the next stage in their ongoing organic growth", Al-Shaikh said.

Tamweel chairman Sheikh Khaled bin Zayed bin Saqer Al-Nehayan said the major shareholders of both companies - Emaar Properties for Amlak Finance, and Dubai Islamic Bank and Dubai World for Tamweel - are fully supportive of the merger discussions.

"We hope to move the process forward quickly and efficiently with minimal disruption to our customers and employees," Sheikh Khaled 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.

Following the Al Khaleej report speculation has been growing that Abu Dhabi's leading banks, Abu Dhabi Commercial Bank (ADCB) and larger rival National Bank of Abu Dhabi (NBAD), are set to merge.

The shares of both lenders surged on at the beginning of last week despite executives from both companies denying a merger was on the cards.

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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