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Dubai's Amlak, Tamweel to speed merger amid crunch

DUBAI - Dubai Islamic mortgage providers Amlak and Tamweel aim to complete their $1.6 billion merger rapidly as the global credit crisis strikes the Gulf.

In interviews with Reuters, the two firms' chief executives said they expect to complete the merger, first unveiled on Oct. 4, by the end of the first quarter in 2009 as they seek government assistance to help them through the crisis.

"We're expecting to go through the approval process by the end of the year. By the end of the first quarter 2009 we are expecting the merger to go through," Tamweel's chief executive Wasim Saifi told Reuters on Tuesday.

The Amlak-Tamweel merger would be Dubai's biggest since Emirates NBD, the largest Gulf lender by assets, was formed last year in an $11.3 billion government-brokered merger between Emirates Bank International and National Bank of Dubai.

It is also a sign of how the credit crisis has hit boomtown Dubai, where it is expected to pressure real estate developers and lenders to merge.

Saifi said the two companies are in discussions with the government over medium- and longer-term funding options, adding that Tamweel had no problems for short-term funding.

"We're still reasonably ok for the short-term. The issue is the medium and longer term."

Shares in both companies eased after the comments, paring gains to rise 2.4 percent for Tamweel and up 2.6 percent for Amlak.

"It's a similar situation for us. We have access to corporate deposits but these are short-term funding," Amlak's chief executive Arif al-Harmi told Reuters.

"It has become increasingly difficult to tap into international capital markets. We are talking with the government to find medium- to long-term solutions."

Both mortgage lenders downplayed a report that the new entity would become a bank but said both have applied separately for Islamic banking licenses so that they can accept deposits from customers.

"We put in our application two years ago and renewed our application in May this year," al-Harmi said.

Earlier this month Dubai developers Deyaar and Union Properties denied that they were in merger talks but were unable to say if the government was looking into ordering a tie-up.