Bank set up to fund property

The Ministry of Finance establishes the Emirates Development Bank, a lender designed to fund real estate and other development projects, after a two-year delay and an aborted merger.

The Ministry of Finance has set up the Emirates Development Bank to provide loans for property and development projects, more than two years after the UAE Cabinet approved a draft law establishing it.

The Government issued a federal law establishing the bank yesterday.

"The bank will aid in promoting a diversified economy that is built on innovation, provides citizens with suitable housing, and allows for the establishment of development projects to maintain the high living standards enjoyed by UAE citizens," the ministry said.

"The bank will also provide a range of financing and savings solutions to aid citizens in owning houses through reasonable monetary schemes."

Emirates Development Bank will have Dh10 billion (US$2.72bn) of capital to fund "projects pertaining to organisations that provide public benefit," said the ministry.

When the bank's establishment was first approved by the UAE Cabinet in 2009, it was expected that government funding would account for half of its capital.

The Government's intention to create the bank was announced in 2008 and it had been scheduled to begin operations last year. The bank was initially planned as a merger of Emirates Industrial Bank and Real Estate Bank.

At the time of its initial announcement, the Government also announced plans for Real Estate Bank to take control of Amlak Finance and Tamweel, two Islamic mortgage providers that had planned to merge before the financial crisis.

The proposed merger never materialised, leaving shares in Amlak effectively frozen since November 2008.

Tamweel was eventually bought out by Dubai Islamic Bank last year ahead of its return to trading on the Dubai Financial Market in May this year.

The Ministry of Finance declined to say whether Amlak would form part of the newly formed Emirates Development Bank.