The Government will start to merge the country's two largest Islamic home lenders in January after failing to complete a tie-up announced in November last year. "We are moving very forward on that," said Sultan al Mansouri, the Minister of Economy, in Dubai yesterday. "As promised, in January 2010 we will start implementing the solution we have."
Mortgage lending from Tamweel and Amlak has come to a standstill as they were among the first companies to feel the impact of the global financial slowdown. Trading in their shares was halted in November last year pending a government move to restructure them. A state panel has recommended merging the two Dubai-listed lenders into an Islamic bank by next year. The Government had promised to take a decision, including a possible four-way merger with two state-owned banks, by March of this year but repeatedly delayed a final decision.
Analysts say any merged entity needs to be supplied with sufficient capital by the Government to allow it to kick-start the mortgage market. Mr al Mansouri also revealed yesterday that Dubai's plans to sell US$10 billion (Dh36.7bn) of bonds for its support fund would "depend on its needs at the time". The Central Bank in February bought $10bn worth of bonds issued by Dubai to inject into struggling government-controlled companies such as Nakheel.
Dubai has said it planned to sell the second $10bn of the total $20bn bond programme before the end of the year. Recently, the emirate has begun moves to pay off more of its estimated $85bn debt burden, largely amassed during the construction boom. It launched a $6.5bn bond programme, split into $4bn of medium-term notes and a $2.5bn sukuk, last month. Some of the funds are expected to go towards repaying a $1bn bond from Dubai's Civil Aviation Department, which is due this week.
The Government last week prepared to fill orders of about $2bn for a new Islamic bond. The issue was more than three times oversubscribed. @Email:tarnold@thenational.ae
