ABU DHABI // The Government has merged the Industrial Bank with three other financial institutions to create a state-backed mega-bank aimed at reviving lending to property buyers and developers. Late last night the Government announced the second significant merger in two days. The Ministerial Council for Services approved the merger of the the Industrial Bank with the Real Estate Bank, which had only a day earlier been combined with Amlak Finance and Tamweel, the country's two largest home loan companies, both severely affected by the credit crisis.
The new mega-bank will be known as the Emirates Development Bank. Mahmood al Mahmood, the chief executive of Al Qudra Holding in Abu Dhabi, had predicted the creation of such a bank last week. "Today, we have an urgent need for it," he said, adding that it would "take part in financing some of the mortgage companies and real estate developers. It would extend facilities whenever needed." The merger of Amlak and Tamweel announced late on Saturday, had already formed one of the largest property finance firms in the Middle East with Dh25 billion (US$6bn) in assets and tens of thousands of clients. Through the first merger they fell under the umbrella of Real Estate Bank - an arm of the Ministry of Finance and Industry with just 7,000 customers and two offices in the whole country, according to the state news agency WAM. The Industrial Bank is majority owned by the Federal Government and several national banks have minority stakes. The decision to merge the two leading home finance providers with two state banks is part of a worldwide trend of governments stepping in to support critical industries in the wake of the credit crisis. Amlak and Tamweel had entered difficult territory in recent weeks and were thought to be unable to source new financing to fund operations. Trading in both companies' shares was suspended yesterday. Amlak's stock closed at Dh1.02 on Thursday, down 80 per cent on the year, while Tamweel's shares closed at 99 fils, down 85.5 per cent. The new Emirates Development Bank, which analysts say will have access to federal funds, the nation's home finance sector may be in a stronger position to weather the slowdown in the local economy. It will also be in a strategic position to grow in the region. email@example.com