UPDATE 2-Dubai mortgage lenders Amlak, Tamweel mull merger
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DUBAI, Oct 4 (Reuters) - Dubai-based mortgage lenders Amlak Finance AMLK.DU and Tamweel TAML.DU have begun merger talks, the two companies said on Saturday, as liquidity in the Gulf region tightens.
"(The companies) have begun exploratory discussions for a possible merger of their respective operations," a joint statement said, adding: "A potential merger will bring significant benefits to the companies, shareholders and customers."
The talks have the "blessing and support" of Dubai's ruler, Sheikh Mohammed bin Rashid al-Maktoum, the statement said.
Analysts say Gulf banks and financial institutions face merger pressures as the global financial crisis tightens liquidity in the region,
An Amlak-Tamweel merger would be Dubai's biggest since Emirates NBD ENBD.DU, the largest Gulf Arab lender by assets, was formed last year in an $11.3 billion government-brokered merger between Emirates Bank International and National Bank of Dubai.
Faced with growing competition from global players, lenders in the world's biggest oil-exporting region had begun consolidating even before the global crisis. Some 45 banks operate in the country of 4.5 million people, according to central bank data.
"The resultant entity would have a combined balance sheet in excess of 27 billion dirhams ($7.35 billion) and serve as a financial powerhouse," said Nasser al-Shaikh, chairman of Amlak Finance.
The Gulf's energy wealth at first shielded it from the global credit crisis but an exodus of foreign capital in the past month has aggravated tight lending conditions, forcing Gulf central banks to intervene to keep the economy functioning.
Last month, the United Arab Emirates central bank launched a $13.62 billion emergency facility to address liquidity constraints on the interbank market stemming.
Two of Tamweel's officials have been detained for questioning by Dubai police in recent weeks -- part of a series of highly publicised probes of officials at major Dubai companies, mostly linked to the real estate sector. (Reporting by Firouz Sedarat; Editing by Ruth Pitchford)
