Amlak, Tamweel to restart lending

The federal government is planning to reactivate Amlak and Tamweel as two independent companies before they can be merged as one entity, Emirates Business has learnt.

In an interview yesterday, Nasser bin Hassan Al Shaikh, Director-General of Dubai's Department of Finance and Chairman of Amlak Finance, said the priority of the federal government is to reactivate the two companies so both firms can start to extend mortgages once again before working on the merger.

"As far as I know, their intention is to reactivate the two companies and then work on the merger," he said. "They don't want to merge the two companies before they activate them, which makes sense because Amlak and Tamweel – which represent more than 60 per cent of the mortgage industry in Dubai – are very important to the real estate."

"The road is paved to the merger and we have a common agreement between the two boards and the two management teams, and at the end it will be the shareholders decision," he added.

Al Shaikh said liquidation is not an option, noting that the committee is already at the end of the planning phase, and would later on move to the execution phase.

He said the introduction of the federal government means more support will be afforded to the two companies.

"I think it will add value. It will ensure that the merged company will have enough liquidity because liquidity is a major issue for mortgage players," he added.

He said the issues on acquiring limited banking licences as well as the rescheduling of debt are currently being discussed by the ministerial committee. "This will be a part of reactivating the two companies such as talking to the creditors and extending or restructuring debt obligation so whatever is payable this year can be pushed back in a number of years," Al Shaikh added.

In October last year, Tamweel and Amlak announced merger talks. It was expected that the resultant entity would have a combined balance sheet in excess of Dh27 billion and serve as a financial powerhouse.

It was later announced in November that the two financing entities would come under the umbrella of the Real Estate Bank. This set-up, however, is no longer on the table, sources say.

The future of Tamweel and Amlak is currently under review by a ministerial committee chaired by the UAE Minister of Economy Sultan bin Saeed Al Mansouri.

Three options are now being considered, Al Mansouri said last month – the first is to merge the two firms although both have their own pros and cons. The second is to not merge them – to keep them separate and make each firm address the issue separately. The third, which is not an option "for now" is liquidation.


Announcement 'within weeks'

Home finance firms Amlak and Tamweel will be back in the market shortly as independent Islamic mortgage lenders, according to a top official close to the deal.

"It is only a matter of formality now and could happen within weeks. Amlak and Tamweel are the only two Islamic home finance firms. They are a very important element of the economy and unless they are brought back to lending, it will delay the revival of the whole economy.

"They being out of the market is holding back sentiment. The sector needs to be dealt with," said the official. The merger is not off the table, but could be decided at a later date. "The direction will be set by the government," he said. (Eudore Chand)

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