Tamweel says Amlak merger still possible in Q1

The planned merger between troubled Dubai Islamic mortgage companies Tamweel and Amlak is still possible in the first quarter as progress is being made, Tamweel's chairman said.

"From our side we see some progress," Sheikh Khaled bin Zayed al-Nayhan told Reuters on Wednesday.

Tamweel and Amlak have both been hit hard by the collapse of Dubai's once-booming property sector and shares in the two companies were suspended in 2007 and have not traded since.

The United Arab Emirates government said in November 2008 it intended to merge the two firms and has been working on a plan to restructure them.

"At the same time we have concerns as it is taking too long. It (the merger) is vital for the economy ... Q1 is still possible," Sheikh Khaled said.

He said the new entity's existing capital was around Dirhams 3.5bn ($953 million), adding: "The governent could come up with another Dirhams 1 or 2bn. It depends on the government's appetite."

A state panel led by the economy minister has been reviewing the merger plans. In October, the minister said the panel was recommending merging the two lenders into a single, Islamic bank early this year.

Sheikh Khaled said Tamweel's default rate was above 3 per cent. "It came down at the end of the year, but now it has come back slightly higher."

Sheikh Khaled is a member of the ruling family of Abu Dhabi, the largest in the seven-member UAE fderation.