x Abu Dhabi, UAEFriday 21 July 2017

Dubai Islamic Bank considers larger holding in Tamweel

Planned merger with rival Amlak apparently scrapped

Dubai Islamic Bank (DIB), the country's largest Islamic lender, is evaluating options to increase its stake in Tamweel as plans to merge the Sharia-compliant mortgage financier with the rival Amlak are apparently scrapped. "The bank is currently evaluating the possibilities of increasing its stake in Tamweel," Mohammed Saeed al Sharif, the chief financial officer at DIB, said yesterday.

DIB holds 19.9 per cent of Tamweel. The disclosure came after earlier reports that the bank might take over Tamweel while negotiating with the troubled home financier's lenders to restructure its debt.The Arabic-language newspaper Alrroya Aleqtisadiya said yesterday plans for a merger between Amlak and Tamweel had been scrapped, citing unnamed sources. "A proposal to merge the two companies has been dropped to be replaced with the option of Dubai Islamic Bank (DIB) stepping in to save Tamweel," the paper said, adding that other information suggested that a company linked to the Dubai Government could take a similar step towards Amlak.

Tamweel and Amlak wrote the bulk of the mortgages in Dubai's once-booming property market, offering as much as 90 per cent financing to new homeowners. But the collapse in the property market, which saw prices fall by as much as 50 per cent in some areas of Dubai, and rising mortgage defaults forced the Government to step in. Trading in Tamweel and Amlak shares on the Dubai Financial Market was suspended in 2008 and has not resumed.

DIB is the second-largest shareholder in Tamweel after Istithmar World, a fully owned subsidiary of Dubai World, which is at an advanced stage in restructuring US$23.5 billion (Dh86.31bn) of debt with lenders and trade creditors. Istithmar World has a 21.6 per cent stake in Tamweel. A spokesman for Tamweel, when asked to confirm DIB's bid to increase its stake, said: "There have been several proposals and this is one of the proposals. But nothing has been finalised.

"I cannot confirm any of the mechanisms, and it is the first time I have heard about a [debt] moratorium [offered to Tamweel lenders]," the Tamweel spokesman said. Majed Azzam, an analyst at Al-Futtaim HC Securities in Dubai, said that keeping both Tamweel and Amlak in business was vital for the mortgage market. But how this would be done remained unclear. * additional reporting Uta Harnischfeger skhan@thenational.ae