Many students wade through waist-deep water to head to neighbour's house for online classes
Tamweel and Amlak have both been hit hard by the collapse of Dubai’s booming property sector and shares in the two companies were suspended in 2007 and have not traded since.
“Very limited public information has been made available so far on Tamweel’s merger,” Moody’s analyst John Tofarides said. “Although the merger will likely go forward, failure to do so would place material pressure on Tamweel’s ratings.”
The UAE government said in November 2008 it intended to merge the two firms and has been working on a plan to restructure them.
“From our side we see some progress,” Shaikh Khaled bin Zayed Al Nayhan told Reuters in an interview.
“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,” he added.
He said the new entity’s existing capital was around Dh3.5 billion ($953 million). “The governent could come up with another Dh1 or 2 billion. It depends on the government’s appetite.”
On December 30, the Dubai government said it formed a judicial committee to protect creditors and companies related to Amlak and Tamweel, in what was seen as a bid to boost transparency. The Gulf emirate’s reputation took a big hit over its request last November 25 for a delay in repaying $26 billion in debt linked to flagship firm Dubai World. 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. Shaikh 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.”
Moody’s cut Tamweel’s rating to Baa3/P-3 from Baa1/P-2 with a negative outlook on December 15. “Despite current turbulences, Tamweel’s business model has a future given the structural need for housing and commercial properties in the UAE, but will likely undergo major changes in shareholding, organisation and status,” the ratings agency said in a report in January.
“A three per cent default is not that bad,” said analyst Ahmed Badr at Credit Suisse. Badr added that both companies have not been involved in the mortgage market for some time and expects new players to emerge either at the end of this year or mid-2011.
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