Dubai mortgage majors under pressure, mulls merger

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Dubai, Oct 5 (UNI) Two leading mortgage lenders of Dubai Amlak Finance and Tamweel have begun merger talks, indicating that the global financial crisis may be choking liquidity in the region.

''(The companies) have begun exploratory discussions for a possible merger of their respective operations,'' a joint statement said, adding: "A potential merger will bring significant benefits to the companies, shareholders and customers.'' The talks have the ''blessing and support'' of Dubai's ruler, Sheikh Mohammed bin Rashid al-Maktoum, the statement said.

An Amlak-Tamweel merger would be second biggest in about a year.

Last year in a 11.3 billion dollars merger, two government owned banks Emirates Bank International and National Bank of Dubai fused to form a joint entity.

The statement on Amlak and Tamweel merger however skipped any talk of any financial crisis. ''The resultant entity would have a combined balance sheet in excess of 27 billion dirhams (7.35 billion dollars) and serve as a financial powerhouse,'' said Nasser al-Shaikh, chairman of Amlak Finance.

The Gulf's energy wealth at first shielded it from the global credit crisis but an exodus of foreign capital in the past month has aggravated tight lending conditions, forcing Gulf central banks to intervene to keep the economy functioning.

Goldman Sachs International is advising on the merger.

Amlak's share price is down 35.67 per cent so far this year, while Tamweel's is down 44.53 per cent. Dubai's main index is down 30.42 percent year-to-date, the Arabian business said.

Tamweel's shares plummeted 35.15 per cent last month, driven down by the ongoing corruption scandal that has seen several former senior executives arrested and the fallout from the US financial crisis.


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