Tamweel becomes subsidiary of DIB

The Government of Dubai has given the final nod to Dubai Islamic Bank (DIB) to increase its shareholding in Tamweel to 57.33 per cent, allowing the bank to become the largest shareholder in one of the region's largest mortgage providers.

The stake increase is with the full support of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.

The move is expected to help revive lending in Dubai's property market.

The deal effectively renders Tamweel a subsidiary of Dubai Islamic Bank, which is now its biggest shareholder at 57.33 per cent raising its stake from 20.7 per cent, Dubai government's media office said in a statement.

The bank has bought about 21 per cent from Istithmar, while the rest has been acquired from Dubai Holding and other entities within that group. No financial details of the deal were revealed.

DIB Chief Executive Officer Abdulla Al Hamli said at a press conference that new funds will be injected into Tamweel, but all will depend on the market need.

The bank is unlikely to make any top management changes even though it will revisit Tamweel’s business strategy, a top company executive said.

“We are not going to make any changes in the top management team. However, we will be reviewing their strategies. There was no solution for Tamweel for the past two years… we as strategic shareholders found that solution and are here to help them revive,”” DIB’s Chief of Retail and Business Banking Dr Adnan Chilwan said.

“We now have the management control of Tamweel and would go and revive its business model. It just does not mean origination… it also means what sort of business strategy we want to put in place. Clearly, the market has changed in the last 24 months and so we have to be cognizant of all those facts when we take over,” he added.

Tamweel Chief Executive Officer Wasim Saifi said: “DIB has been our strategic shareholders… our largest creditors. All through this period they have been involved in the business side. Besides, they had two seats on our board and so I see their continuing involvement rather than now looking our strategy afresh.”

The Islamic bank expects to complete the phase one, which is culmination of talks with the strategic stakeholders, in the next few months. Officials did not comment on whether the bank would initiate talks with remaining shareholders.

The acquisition will be reflected in the balance sheet in the fourth quarter, DIB Chief Finance Officer Mohamed Sharif said.
Trading of shares of Tamweel and another mortgage finance firm Amlak remains suspended on the Dubai Financial Market (DFM) since November 2008 following a decision to merge the entities.

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