Two government-controlled mortgage lenders in Dubai have said they are discussing a merger, a sign that political pressure and strained liquidity may spur the consolidation of the finance industry in the United Arab Emirates.

Amlak Finance and Tamweel, which have a combined balance sheet of Dh27bn ($7.35bn, €5.33bn, £4.13bn), said the combined company would have sufficient size to expand outside the UAE. Both lend according to Islamic principles forbidding usury and promoting risk-sharing.