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Sun 17 May 2009 04:23 PM

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Gov't approval for Tamweel, Amlak merger due in weeks

Tamweel chairman says merged firm may look to markets for extra funding later in year.

UAE mortgage lenders Tamweel and Amlak will receive government approval to merge within weeks, and may look to the markets for additional non-government funding later this year, the Tamweel chairman said on Sunday.

A government committee has been reviewing the two Islamic home finance companies’ future since November, when their shares stopped trading and the government said it would merge the two entities.

The federal government is deciding the new structure of the companies and is not working with any external consultants, Sheikh Khaled Bin Zayed Al Nahyan told reporters on the sidelines of the World Economic Forum in Jordan.

“They haven’t spoken to us as a company yet, but once how they want to get involved is finalised, then we will become involved in the process,” he said.

The two companies will most likely go ahead with a merger, he added.

“The possibility is good but the shareholders have to agree on what is needed, the valuation and the new structure of the company.”

The UAE government will recapitalise the two companies before merging.

The size of the capital injection will reflect how much it wants to boost the country’s real estate sector, Sheikh Khaled said.

“If it’s minimal, there is minimal requirement. If it’s major, it’s going to be a major requirement.”

The new company may also look to the private sector for funding later in the year, he added.

“The market is coming back now for funding for organizations. I think this is going to be feasible in the next year."

Sheikh Khaled said he did not see the mortgage market improving until October.

“I don’t think that you will see a lot of change or optimism in the summer but we look forward to September and October when everybody is back."

"We are still in the middle of the crisis, we are not out of it yet. It is going to take more than what has happened to take us out of it,” he said.

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