UPDATE 1-UAE's Amlak to sell up to $1.3 bln in Islamic bonds

(Adds background, CEO comment)

By John Irish

DUBAI, March 23 (Reuters) - Dubai-based mortgage lender Amlak Finance AMLK.DU said on Sunday it planned to sell as much as 4.8 billion dirhams ($1.31 billion) worth of convertible and non-convertible Islamic bonds this year to help finance expansion.

"This is an initial approval after the extraordinary general meeting for the board to look into these programmes," Arif al-Harmi, Amlak chief executive officer, told Reuters.

Amlak plans to issue convertible Islamic bonds, or sukuk, worth up to 1.8 billion dirhams and as much as 3 billion dirhams of non-convertible sukuk, it said in a statement.

Banks have yet to be mandated for the sales, Harmi said, adding that it was part of the company's 2008 financing requirements.

The firm plans to raise about 6 billion dirhams this year, including through the sale of covered bonds -- debt securities backed by cash-flow from mortgages -- or Islamic bonds that are convertible to shares, Amlak Chairman Nasser al-Shaikh told Reuters in February.

Sukuk comply with Islam's ban on the receipt of interest, and are typically based on physical assets which pay a dividend or rent to bondholders.

Gulf Arab issuers have slowed borrowing plans as concerns over the U.S. economy and the falling dollar have pushed issuers to weather market conditions.