DUBAI - AMLAK Finance and Tamweel, two Dubai-based property finance groups with total assets of around 7 billion dollars (S$10.7 billion), have begun a merger process, the official WAM newsagency reported on Saturday.

The merger of the two banks under the supervision of UAE Real Estate Bank will create the largest real estate finance institution in the country, the UAE finance ministry said, according to WAM.

'The merger of Amlak Finance and Tamweel is a milestone development for the UAE financial sector,' a ministry official said.

'The new entity will provide a strong growth platform for real estate financing in the UAE, and will serve as the cornerstone of the mortgage market, which has significant growth potential,' the official added.

The combined group will be compliant with Islamic Sharia rules, which ban the charging of interest, WAM said.

In the first half of 2008, Amlak Finance had assets of 14.2 billion dirhams (S$5.9 billion) and Tamweel's assets were worth 10.8 billion dirhams (S$4.5 billion), giving a combined value of 25 billion dirhams, WAM reported.

News that the merger process is underway, after the idea was mooted in early October, came on the eve of the start of a new stock market week in the Emirates, where property stocks have fallen sharply in recent weeks amid the global economic crisis. -- AFP