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Merger may Help Mortgage Firms Get Access to Overseas Funding

DUBAI — The merger move by Amlak Finance and Tamweel may help the Dubai-based mortgage lenders get a better credit rating and access to affordable overseas funding to tide over the escalating local liquidity crisis, analysts said.

“A merger between the two Islamic mortgage titans will not only result in a stronger balance sheet and a combined paid-up capital base of Dh4 billion that will enable the new entity to get a better credit rating,” analysts said. Tamweel is the highest-rated non-banking financial institution in the region (rated A by Fitch and A3 by Moody’s) while Amlak Finance is the largest real estate financier in the Middle East by market value and total assets.

“At times of liquidity crunch like this, a good credit rating will better-position the merged entity with a balance sheet of more than Dh27 billion to raise funds from foreign markets,” P. Krishnamurthy, CEO of Dubai International Securities, said.

Analysts said Gulf financial institutions face merger pressures as the global financial meltdown tightens liquidity in the region in the wake of increased capital exodus. “The merger plan is a cautious move by the authorities to lessen the impact of the snowballing global credit crunch that had sapped the local liquidity.”

issacjohn@khaleejtimes.com