Amlak and Tamweel merge in Abu Dhabi

Bloomberg

"The new entity will provide a strong growth platform for real estate financing in the United Arab Emirates, and will serve as the cornerstone of the mortgage market," Amlak cited an unidentified official at the country’s Finance Ministry as saying in a statement to the Dubai bourse today. Dubai is bracing for a slowdown in the property market as economic growth slumps and oil prices fall. Dubai is considered the most vulnerable place in the Persian Gulf to lower oil prices as real-estate and debt financing pose risks, Citigroup Inc. said Nov. 18.

Real Estate Bank, a unit of the U.A.E. Ministry of Finance, was formed in 1999 to "support real estate and provide housing for U.A.E. nationals through Sheik Zayed housing program" and currently has more than 7,000 customers, according to the statement. The combination of Amlak and Tamweel with the Real Estate Bank will "ensure a fair process for the current shareholders and customers," it said.

"By leveraging the combined expertise of Amlak Finance and Tamweel, the Real Estate Bank will enhance the value proposition for customers with broader product capabilities, and meaningful operational and financial synergies," Amlak’s Chairman Nasser bin Hassan Al Shaikh said in the statement.

Outstanding mortgage loans in the U.A.E. almost doubled in the year through June as property prices soared to a record. Mortgage loans leaped 92 percent to $23.8 billion, compared with annual growth of 55 percent in March.

The planned merger comes a year after the combination of Dubai’s two biggest banks that created Emirates NBD PJSC, now the biggest Gulf Arab lender by assets. That merger, spurred by Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum, was meant to take on competition from the local units of Citigroup Inc. and HSBC Holdings Plc.