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Amlak and Tamweel merge into UAE Real Estate Bank

23 Nov

real-estate-bank-logoamlak_logo_sansbord1 tamweellogo176


Update : UAE’s Real Estate Bank and Emirates Industrial Bank (EIB) to merge in Emirates Development Bank.

The Abu Dhabi-based Real Estate Bank, which Islamic mortgage lenders Amlak Finance and Tamweel are to merge under, is to combine with the Emirates Industrial Bank (EIB) to create the UAE’s largest home finance company. The UAE’s Ministerial Council for Services (MCS) has approved the merger of the Real Estate Bank and the EIB, which will be called the Emirates Development Bank.

Amlak and Tamweel, two of the United Arab Emirates’ largest mortgage lenders, already on track to merge, will be brought under a government-owned bank, the UAE finance ministry said, in the first sign of federal government intervention in Dubai’s troubled property sector.

Trading in both Amlak and Tamweel, which have been struggling amid the global credit crunch, was suspended after the finance ministry said it would supervise their merger under the government’s Real Estate Bank to ensure a fair valuation and protect shareholders.

« For Amlak and Tamweel it was always clear that some level of government support was necessary, » said Raj Madha, a banking analyst at EFG-Hermes. « There were three problems that Amlak and Tamweel were facing: funding, liquidity and solvency. A merger between the two would have made no difference to those problems but an integration with Real Estate Bank effectively addresses all three of those issues, » he told Reuters.

Little-known Real Estate Bank, which comes under the finance ministry, is a government-owned entity aimed at supporting the real estate sector and providing housing for UAE nationals, according to its website. The companies will be combined as the UAE Real Estate Bank to create the largest real estate finance institution in the country, the state news agency WAM said.

An official from ministry of finance, said: « The merger of Amlak Finance and Tamweel under the Real Estate Bank is a milestone development for the UAE financial sector. The new entity will provide a strong growth platform for real estate financing in the UAE, and will serve as the cornerstone of the mortgage market, which has significant growth potential. » The process towards combination of the operations will ensure a fair process for the current shareholders and customers. The approach will be based on international best practices with distinct steps that include financial and legal due diligence, independent valuation, regulatory and other related approvals as well as integration of the entities.

Source: Reuters and Emirates News Agency – Syndication : RIBH.

 
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Publié par le novembre 23, 2008 dans Dubai

 

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