- Positions eliminated mostly in retail sales as growth slows
- Other U.A.E. lenders, Emirates NBD, RAKBank also cut jobs
Union National Bank PJSC, a lender owned by both the governments of Abu Dhabi and Dubai, cut about 50 positions as economic growth slows in the United Arab Emirates, two people familiar with the matter said.
The Abu Dhabi-based bank eliminated jobs mostly in retail sales, although there were some in wholesale banking and middle management as well, said the people, asking not to be identified because the information is not yet public. The bank employs about 2,000 people in the U.A.E. A spokesman for the lender declined to comment.
Union National Bank joins other lenders in the U.A.E. that have cut jobs to adjust to stalling economic growth as a halving of oil prices over the past two years hurts government revenue and spending across the Gulf, holder of about a third of the world’s oil reserves. Emirates NBD PJSC, the U.A.E.’s biggest bank, reduced its workforce by more than 250 people at its small and medium enterprise and Islamic lending businesses, it said in April. National Bank of Ras Al-Khaimah PSC cut as many as 250 positions in January.
“Most banks are looking at reducing cost overheads as a means to offset a deterioration in revenue and bad-loan charges,” said Sanyalak Manibhandu, an Abu Dhabi-based analyst at NBAD Securities LLC. Impairments have “been moving higher and are likely to continue to grow into 2017,” he said.
Economic output in the U.A.E., the second-biggest Arab economy, will expand 2.6 percent this year, the slowest pace since 2010, according to the median of 11 analyst estimates compiled by Bloomberg. Banks in the U.A.E. are prepared for deteriorating conditions as oil prices remain lower for longer and asset quality worsens, S&P Global Ratings said Jan. 11.
Impairment charges at Union National Bank climbed 7 percent in the six months through June, with the lender reporting a decline in profit in each of the past four quarters.
The job cuts at Union National Bank also come amid consolidation in the banking industry in Abu Dhabi. National Bank of Abu Dhabi PJSC and First Gulf Bank PJSC, the emirate’s two biggest lenders, have agreed to a combination that will create a regional powerhouse with $175 billion in assets. The merger may trigger further consolidation in the industry, including possibly a tie up of Union National Bank and Abu Dhabi Commercial Bank PJSC, according to investment bank EFG-Hermes Holding SAE.