Shuaa Capital plans to cut 10.7% of its staff – roughly 39 jobs – after a poor first quarter, Reuters reported. The firm, which is 48.4% owned by Dubai Bank Group, blamed political unrest in the Gulf Arab region for the poor results. A sharp drop in real estate values and lack of initial public offerings as well as competition from international banks has prompted Shuaa to slash costs, Reuters wrote.
(Reuters) – Shuaa Capital (SHUA.DU) said on Wednesday it would cut 10.7 percent of its staff, or 39 jobs, to reduce costs after political unrest in the Gulf Arab region took a toll on the investment bank’s quarterly results.
Shuaa — 48.4-percent owned by Dubai Bank Group which belongs to the Gulf Arab emirate’s ruler — swung to a first quarter net loss of 26.3 million dirhams ($7.16 million) from profit of 19.5 million dirhams in the prior-year period.
A sharp drop in real estate values and lack of initial public offerings as well as competition from international banks has prompted Shuaa to slash costs.
It is targeting 30 million dirhams in annualized savings.
“Whilst we have made significant operational improvements over the last year we have had to take further tough decisions to ensure that even in the most challenging environment Shuaa can be profitable,” Chief Executive Sameer Al Ansari said in a statement.
“Shuaa is trying to restore its position to come back into the market,” said Marwan Shurrab, vice-president and chief trader at Gulfmena Alternative Investments. “Its numbers were a bit disappointing but it is not a major bluechip that would affect the market.”
Shuaa shares, which have lost 9.6 percent year-to-date, were flat on Wednesday. The Dubai index .DFMGI was up 0.7 percent.
Revenue for the quarter was 27.1 million dirhams. It did not give comparable year-ago figures but the investment bank said its asset management division had inflows for the first time since June 2008.
Shuaa has been shedding risky assets from its investment portfolio after Dubai’s property crash and asset bubble. On Wednesday, it said it might look at acquisitions to “take advantage of consolidation opportunities.” It gave no details.
After years of expanding regionally and abroad, the group was hit hard by the global downturn as impairments related to troubled assets erased profits.
Last month Shuaa said its Chief Financial Officer David Deards had resigned effective April 5. [ID:nWEA2915] (By Dinesh Nair; Additional reporting by Nadia Saleem, Editing by Jane Merriman) (firstname.lastname@example.org; +971 4 391 8301; Reuters Messaging:email@example.com)) ($1=3.673 Uae Dirham)