x Abu Dhabi, UAESunday 23 July 2017

Financial consultancies feel the squeeze in the UAE

KPMG warns that consultancy firms face intense pressure because of cut-throat pricing, fewer big deals and a flood of staff into the Emirates.

KPMG's Ian Gomes says the UAE market has
KPMG's Ian Gomes says the UAE market has "become very tough and very competitive". Jaime Puebla / The National

Financial consultancies in the UAE face intense pressure because of cut-throat pricing, fewer big deals and a flood of staff from foreign firms in the local market, according to a senior KPMG executive.

"This market has become very tough and very competitive. Everyone seems to put all the proposals through their procurement and you get squeezed on price," said Ian Gomes, KPMG's head of advisory, markets and human resources in the UAE.

"At the same time, a lot of global firms are moving their resources into the country because things are slowing down abroad."

The accounting giant has reviewed its business operations and rescaled its corporate finance division, which includes valuations, financial markets and mergers and acquisitions (M&A).

KPMG has made job cuts in its M&A division over the past 12 months, although Mr Gomes would not confirm how many positions had been affected.

"All the advisory businesses have gone through the scanner and it resulted in a lot of streamlining and restructuring," he said. The M&A division is believed to have about 30 staff, while KPMG has a total of about 800 staff in the UAE.

"We needed to make the mathematics work. We looked at our key competitors, the investment banks, and some of them are starting to retrench and are considering if it's wise to continue to have a full-scale team. So we have cut back there."

Firms including Deutsche Bank, UBS and Bank of America Merrill Lynch have cut jobs in the Dubai International Financial Centre and relocated regional staff to Europe over the past two years. Others, such as Credit Suisse and Morgan Stanley, have shifted some investment banking functions to Doha and Riyadh.

However, there has been a substantial increase in the DIFC workforce during the past year, growing by 16 per cent to about 14,000, the centre said last week.

Much of the growth has come from financial firms from emerging markets such as Itaú Unibanco, Bank of China and Russia's VTB Capital, which have hired aggressively in a bid to tap into opportunities in the Middle East.

But KPMG says revenue growth will come from oil and gas, telecoms and financial services. The big four accountancy firm, which was appointed in 2009 as a leading adviser to creditors exposed to the Dubai World restructuring effort, expects a rise in business from the banking sector as borrowers renegotiate their financial terms.

"Many companies have managed to stave off the restructuring trend after the Dubai property bubble burst because of the low interest environment," Mr Gomes said.

"But the state of the market is such that there is no global growth. Customers are not buying. As such they are needing to restructure and renew their credit lines with the banks."

There has been a huge challenge for the big advisory firms to gain more clients that are directly linked to the everyday economy in the UAE, said Fathi Ben Grira, the chief executive at Mena Corp, the Abu Dhabi investment company.

Abu Dhabi's family conglomerates represent an untapped opportunity for consultants, he said.

"There is huge potential in Abu Dhabi," Mr Ben Grira said. "There is a lot of business to be made from advising efficiency and organising a neat corporate structure for companies to go public. But unfortunately, the culture is not there yet."

halsayegh@thenational.ae