x Abu Dhabi, UAEFriday 19 January 2018

Rasmala shuts retail brokerage

Rasmala Holdings said it shut its retail brokerage business in an effort to reduce costs, the Dubai based investment bank said yesterday.

Regional markets are struggling to revive liquidity. Charles Crowell / Bloomberg
Regional markets are struggling to revive liquidity. Charles Crowell / Bloomberg

Rasmala Holdings has shut its retail brokerage in an effort to reduce costs, it said yesterday.

Rasmala will instead focus on institutional equity sales amid dwindling demand for buying and selling shares among the general public.

"The retail operation was always a secondary part of our business. We found it too much of an operational headache to maintain, combined with higher costs and added risk," said Ali al Shihabi, the chairman of Rasmala Investment Bank.

The company has shut its three retail branches in Egypt, but continues to provide brokerage services to clients online.

Rasmala is also incorporating its private equity unit into its corporate finance business to focus on single deals, he said. The company had already embarked on a round of job cuts in November to lower costs by as much as 25 per cent.

About half of the brokerages operating in the Emirates have closed in the past year. There are now 65 companies operating in the country, down from 103 at the beginning of last year, according to trading reports published by the country's bourses.

It comes as regional markets struggle to revive liquidity and boost volumes as political upheaval and underperforming equities dampen investor appetite for new listings.

"The market needs a material listing, an asset of international quality. The alternative is a series of smaller listings that go well," said Paul Reynolds, the head of Rothschild's Middle East debt and equity advisory.

The total value of share sales in the region slumped almost 100 per cent to their lowest level in five years in the first quarter, an Ernst & Young report said yesterday.

Middle East companies managed to raise just US$21.7 million (Dh79.7m) in initial public offerings (IPO) in the first three months of the year, compared with $420.4m in the same period last year, the report said.

The UAE ended its two-year hiatus of IPOs when two insurance companies sold their shares to the public in the first quarter of this year for a combined total of just over $40m.

Abu Dhabi's Insurance House raised Dh66m when it sold 55 per cent of its shares in March, and the Islamic insurer Wataniya's Dh82.5m IPO was oversubscribed at least six times.

A public offering by Eshraq, the Abu Dhabi developer, managed to raise Dh825m this quarter.