Al Mal Capital PSC, a United Arab Emirates investment bank, cut staff about 25 percent and is winding down its brokerage business in the Persian Gulf federation, two people familiar with the matter said.
Eight employees were fired, bringing staff at the bank to about 20, the people said, declining to be identified because the matter hasn’t been made public. The company employed over 100 people in 2008, one of the people said. Al Mal Securities, an Al Mal Capital unit, was ranked 57th by value traded on the Dubai Financial Market in September, according to the bourse’s website.
“Turmoil in the markets including low volumes, falling stocks and scarce liquidity makes it difficult for investment and brokerage houses to operate,” said Nabil Farhat, a partner at Abu Dhabi-based Al Fajer Securities. “Downsizing in order to cut expenditure makes sense at this stage.”
Some banks in the U.A.E. are cutting costs after the credit crisis weakened lending, crimped investment banking and spurred loan defaults. Deutsche Bank AG and Credit Agricole SA are among international banks withdrawing employees from Dubai. The number of “active and functioning” brokerages in the U.A.E. has dropped 38 percent since the end of 2008 to 61, according to the Securities & Commodities Authority website.
Political unrest in the Middle East and debt restructuring pushed Dubai trading volumes to a six-year low. HSBC Holdings Plc, Europe’s biggest bank, is ending retail brokerage to focus on institutional clients, the bank said in October. Al Futtaim HC Securities LLC, a Dubai-based brokerage, is discussing a possible suspension of its trading license with owners, a person involved in the talks said last month.
The volume of shares traded in Dubai has plummeted to a daily average of about 107 million this year from 161 million in the year-earlier period and 470 million in 2009. Dubai’s benchmark index of 31 stocks slumped 84 percent from a record in 2005 to 1,382.71 at the 2 p.m. close in Dubai today.
Fees earned by banks in the Middle East fell 42 percent to $320 million in the first nine months of the year from $551 million in the same period in 2010, according to New York-based research firm Freeman & Co.
Al Mal officials weren’t immediately available for comment when contacted by Bloomberg News yesterday.