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Mon 8 Jun 2009 07:49 PM

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Tamweel disputes media report on funding needs

UPDATE 1: Dubai mortgage lender dismisses analysis and conclusion of report.

Dubai mortgage lender Tamweel PJSC rejected on Monday a media report saying it needed $1.55 billion in funds to restart its financing operations, but did not say how much it did need."We do not agree with either the analysis or the conclusions of this media report," the company said in a statement.

Tamweel and rival Amlak Finance PJSC are being restructured by the government and could be merged as they suffer from a sharp downturn in residential real estate prices in their home market.

An unsourced report in newspaper Emirates Business on Sunday said Tamweel needs 5.7 billion dirhams in funding before June 30 to meet its commitments, while Amlak needs around 13 billion dirhams.

A decision on whether to merge both Islamic home finance companies will happen only after the government unveils the restructuring plan, Tamweel's chairman Sheikh Khaled Bin Zayed al-Nahyan said last month. Officials have been saying since March this decision would be made soon.

The potential merger of the two companies has been under review by a federal government committee since the United Arab Emirates said in November it would merge them with two state-controlled banks.

Amlak and Tamweel would be recapitalised with money from the government and would not tap into proceeds from Dubai's $10 billion bond sale earlier this year, Sheikh Khaled said in April.

Shares in both lenders have been suspended since last year and would only resume trading on the Dubai Financial Market once the government unveils the new structure, Sheikh Khaled said.

Dubai's residential real estate sector is suffering from a slowdown in prices of as much as 50 percent from peaks late last year. This has put a strain on home financers bracing for a rise in home loan defaults. (Reuters) 

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