x Abu Dhabi, UAEFriday 19 January 2018

Shuaa Capital names new chairman, announces job cuts

Shuaa Capital, the UAE's biggest investment bank, appoints a new chairman and announces layoffs to stem a tide of losses.

Shuaa Capital cut 39 jobs as part of its plan to save Dh30 million. Andrew Parsons / Bloomberg News
Shuaa Capital cut 39 jobs as part of its plan to save Dh30 million. Andrew Parsons / Bloomberg News

Shuaa Capital, the UAE's largest investment bank, has appointed a new chairman and announced job cuts after recording its third loss in four quarters.

The new chairman, Sheikh Maktoum Hasher Maktoum Al Maktoum, is a member of Dubai's ruling family. Dubai Holding, a division of which took over almost half of Shuaa in 2009, is owned by Sheikh Mohammed bin Rashid, the Vice President of the UAE and Ruler of Dubai.

Sheikh Maktoum replaces Majid al Ghurair, who was Shuaa's chairman for 11 years. Sheikh Maktoum is the chairman of the Dubai International Holding Company and the president of Al Fajer Properties, a developer in Dubai.

"Much has been done to transform the business and position it for the opportunities ahead," Sheikh Maktoum said. "My priority and commitment is to facilitate a new sense of confidence in the solid foundations of the firm, sharpen its focus and step up delivery of tangible results to lead the business back to profitability."

In addition to appointing a new chairman, Shuaa said yesterday it was planning to save Dh30 million (US$8.1m) by "right-sizing" the business, including cutting 39 jobs.

The cuts would come "predominantly in back-office and support functions, representing in total 10.7 per cent of the company's full-time employees", Shuaa said, adding it would offer job placement services for those who lost their positions.

The changes followed a disappointing first quarter for Shuaa, where fees collected for advice on major transactions and public listings declined in concert with a fall-off in local trading activity and stock prices.

Shuaa lost Dh26.3m in the first quarter, it said yesterday, pinning its troubles on the disruption of regional markets by unrest in parts of the Middle East. The company lost Dh186.6m in the final quarter of last year. "I think decent earnings are far away - maybe a couple of years away," said Jaap Meijer, a banking analyst at Alembic HC Securities in Dubai.

While Shuaa's recovery may take time, Mr Meijer said the company had made strides by firming up its balance sheet and increasing its equity. He expected revenues to pick up in the coming quarters, but profitability was contingent on a healthy rebound in the regional markets where Shuaa had a strong presence.

The company also pointed to progress in resuscitating its business in the first quarter. It reported its first net inflows at its asset management unit from investors since the middle of 2008 as assets under management grew to Dh784.8m.

It had cash reserves of Dh448m and might "take advantage of consolidation opportunities" in the future, it said. Shuaa's finance division also generated strong profits, the company said, although all other units were loss-making.

"While 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," said Samir al Ansari, the chief executive. "With many of our competitors either exiting business lines or reducing their capability, we see an opportunity to build market share across our core businesses and as such are implementing a revenue enhancement plan to exploit our many advantages."

Shuaa has had to contend with numerous financial and legal challenges in the past few years, including a fine of almost Dh3.5m from the Dubai Financial Services Authority in 2008 for manipulating the share price of DP World, the ports operator listed in Dubai.

Before Dubai Holding took its stake in the company, Shuaa was in a long-running dispute with Dubai Banking Group, a subsidiary of the conglomerate, over the conversion of Dh1.5 billion of bonds into Shuaa shares.

The programme of lay-offs announced yesterday follows 33 job cuts in late 2008 and 2009.

Shuaa shares ended trading yesterday on the Dubai Financial Market at Dh1.16, up 2.65 per cent.