Dubai Islamic mortgage lenders Amlak Finance and Tamweel have begun consultation with key stakeholders over the pair’s proposed merger, the companies said on Sunday.
The companies said in a joint statement that “all key stakeholders have reaffirmed their strong support for a potential combination of the two entities”.
The companies’ main shareholders are Dubai developer Emaar Properties for Amlak Finance, and Dubai Islamic Bank and state-owned conglomerate Dubai World for Tamweel.
The companies have also begun consultation with the Investment Corporation of Dubai (ICD) as representative of the Dubai government, they said.
Subject to successful negotiations and applicable shareholder and regulatory approvals the merger is expected to close in early 2009.
The combined company will have a balance sheet in excess of 27 billion dirhams ($7.35 billion).
Amlak earlier this month denied the proposed merger is due to funding difficulties, stating the tie-up will allow it to pursue growth plans both locally and abroad.
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).
Both Amlak and Tamweel have seen their shares nosedive this year along with many of the stocks on the Dubai market.
Tamweel was down 1.64 percent on Sunday, bringing year-to-date losses to 64.96 percent, while Amlak was down 0.45 percent with year-to-date losses at 56.73 percent.
Dubai’s main index is down 45.79 percent year-to-date.
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