A long-planned merger between troubled Islamic mortgage firm Tamweel and Islamic lender Amlak has likely been scrapped, Tamweel’s chairman said in a television interview on Monday.
“The idea of a merger has become unlikely,” said Sheikh Khaled bin Zayed al-Nehayan in an interview with broadcaster al-Arabiya. “The biggest shareholder in Tamweel is (Dubai Islamic Bank) and there are no longer any thoughts on a merger, at least not at the present moment.”
Dubai Islamic Bank raised its stake in Tamweel in late September to 57.33 percent, effectively rendering Tamweel a subsidiary Dubai Islamic Bank, the emirate’s third-largest bank by market value.
Arabic-language daily Al Ittihad, citing an unnamed source, said on Sunday Emirates Islamic Bank, an affiliate of Emirates NBD is in early talks to acquire Dubai Bank and Amlak.
The United Arab Emirates government said in November 2008 it aimed to merge Amlak and Tamweel and has been working a plan to restructure them. Shares in the two firms have not traded since.
Al-Nehayan said Tamweel’s board will ask for a resumption in trading of the company’s shares.
He added that both DIB and Tamweel will be discussing the possibility of DIB injecting liquidity into the lender only if they wanted to expand Tamweel’s activities in the real estate market.
“I imagine that this will be laid out in a plan or programme that the bank will put together in the next few months,” he said.
Meanwhile, al-Nehayan said Tamweel is set to post third quarter earnings similar to its first and second quarter results as it prepares to start issuing fresh mortgages.
He said the company had taken the bulk of its provisions in 2009.
“We expect Q3 to be similar to Q1 and Q2,” he said. “We have taken enough provisions so now we can translate our revenues into some profits.”
Tamweel reported a second-quarter net profit of 5.4 million dirhams ($1.5 million) and a loss of 3.13 million dirhams in the first quarter of 2010.(Reuters)
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