ABU DHABI // The Government has merged the Industrial Bank with three other financial institutions to create a state-backed mega-bank aimed at reviving lending to property buyers and developers.
Late last night the Government announced the second significant merger in two days.
The Ministerial Council for Services approved the merger of the the Industrial Bank with the Real Estate Bank, which had only a day earlier been combined with Amlak Finance and Tamweel, the country's two largest home loan companies, both severely affected by the credit crisis.
The new mega-bank will be known as the Emirates Development Bank. Mahmood al Mahmood, the chief executive of Al Qudra Holding in Abu Dhabi, had predicted the creation of such a bank last week.
"Today, we have an urgent need for it," he said, adding that it would "take part in financing some of the mortgage companies and real estate developers. It would extend facilities whenever needed."
The merger of Amlak and Tamweel announced late on Saturday, had already formed one of the largest property finance firms in the Middle East with Dh25 billion (US$6bn) in assets and tens of thousands of clients.
Through the first merger they fell under the umbrella of Real Estate Bank - an arm of the Ministry of Finance and Industry with just 7,000 customers and two offices in the whole country, according to the state news agency WAM.
The Industrial Bank is majority owned by the Federal Government and several national banks have minority stakes.
The decision to merge the two leading home finance providers with two state banks is part of a worldwide trend of governments stepping in to support critical industries in the wake of the credit crisis.
Amlak and Tamweel had entered difficult territory in recent weeks and were thought to be unable to source new financing to fund operations.
Trading in both companies' shares was suspended yesterday. Amlak's stock closed at Dh1.02 on Thursday, down 80 per cent on the year, while Tamweel's shares closed at 99 fils, down 85.5 per cent.
The new Emirates Development Bank, which analysts say will have access to federal funds, the nation's home finance sector may be in a stronger position to weather the slowdown in the local economy. It will also be in a strategic position to grow in the region.
bhope@thenational.ae
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
From Europe to the Middle East, economic success brings wealth - and lifestyle diseases
A rise in obesity figures and the need for more public spending is a familiar trend in the developing world as western lifestyles are adopted.
One in five deaths around the world is now caused by bad diet, with obesity the fastest growing global risk. A high body mass index is also the top cause of metabolic diseases relating to death and disability in Kuwait, Qatar and Oman – and second on the list in Bahrain.
In Britain, heart disease, lung cancer and Alzheimer’s remain among the leading causes of death, and people there are spending more time suffering from health problems.
The UK is expected to spend $421.4 billion on healthcare by 2040, up from $239.3 billion in 2014.
And development assistance for health is talking about the financial aid given to governments to support social, environmental development of developing countries.