21 October 2008 The new entity formed from the expected merger of Amlak and Tamweel will have a limited banking licence that will allow it to receive deposits from the public, said sources well informed about the merger deal. A full banking licence remains a possibility, the sources added while pointing out that the approval for a limited banking licence will enable the new company to get the required liquidity to expand its activities. Some analysts had predicted a decline in growth as the global credit crunch makes it harder for banks and financial firms such as Tamweel and Amlak to raise credit from the market. Many home finance firms have already cut the amount they are prepared to lend to 75 per cent, down from the earlier 90 per cent. On Sunday, Amlak and Tamweel said they have "continued to progress" in the merger discussion and have also began consultations with key shareholders. They said they are "working closely" with the authorities to arrange access to liquidity and funding alternatives to fulfill ongoing business. Amlak and Tamweel, together, command some 63 per cent of the mortgage market in the UAE. Damac Capital forecasts that the size of the UAE mortgage market will balloon from Dh32 billion in 2007 to Dh64bn in 2011. HSBC, on the other hand, said the UAE mortgage book will grow by roughly 330 per cent to Dh257bn ($70bn), or 26 per cent of GDP, by the end of the year 2010.

By Karen Remo-Listama

© Emirates Business 24/7 2008 & omar 1.1:zy