UAE investment bank Shuaa Capital plans to cut 55 jobs at its brokerage arm Shuaa Securities, after the company posted a loss of AED293.8m ($80m) for 2011, up from AED223.7m in 2010.
The company says the widening loss was attributed to restructuring costs, a AED30.7m loss on investments and AED31.8m in losses from Shuaa managed funds.
Total revenue for the year was AED99.2m.
The company also closed down Shuaa Securities offices in Jordan, Egypt and is reducing its presence in Abu Dhabi and Riyadh.
“The cost cutting measures have reduced both the number of employees and employee related costs by 39 per cent, which is equivalent to annualised cost savings of AED46m and real estate-related expenses of AED3.5m,” says Sheikh Maktoum bin Hasher al-Maktoum, chairman of Shuaa Capital in a statement.
The company is exiting the retail brokerage market as a cost cutting measure. Shuaa Capital will now focus on providing sales and trading services to institutions, family offices and high-net-worth individuals.
In 2011, the brokerage unit recorded revenues of AED19.9m and a loss of AED129.9m, compared to a loss of AED20.2m in 2010.
The move follows on UAE conglomerate Al-Futtaim’s decision to close down its brokerage business, HC Securities in January 2011. The UK-based HSBC exited its retail brokerage business in the UAE in November 2011. The slump in trade on the UAE capital markets has been blamed for the poor performance of the brokerage firms. The Dubai Financial Market (DFM) fell 17 per cent last year, while the Abu Dhabi Securities Exchange (ADX) fell 12 per cent.
“A lot of brokerages have been reducing staff or shutting down because of [decreased] trading acvitites on DFM and ADX. Trade value on DFM was down 56 per cent last year and it has fallen 92 per cent since its peak in 2007,” says a Shuaa Capital spokesperon.
Shuaa Capital’s shares jumped 12.09 per cent on the DFM to close at AED0.76 on 13 February as the results were announced.