Dubai Finance Hub Defies Global Bank Cuts to Add Positionsby
HSBC among banks to relocate Mideast headquarters to DIFC
Many lenders have been forced to cut jobs amid low oil prices
Dubai’s International Financial Centre said the number of companies based in the hub rose 16 percent during the first half even as lower oil prices and slowing economic growth forced some banks in the United Arab Emirates to cut jobs.
More than 1,500 companies, including 425 financial firms, are now based in the tax-free business park with the number of employees increasing 14 percent to 21,000, the DIFC said in an e-mailed statement on Wednesday. HSBC Holdings Plc said it is moving its Middle East headquarters to the center this year from Jersey, while Bahrain’s Ahli United Bank BSC also set up in the DIFC, it said.
Oil prices that have slumped by more than 50 percent since 2014 have drained billions of dollars from the U.A.E.’s banking system, slowed investment and forced some global and regional banks to fire workers to boost returns. Banks in the country, which also includes Abu Dhabi, may have cut as many as 1,500 jobs, according to financial recruiters and Bloomberg calculations earlier this year.
A city of about 2.6 million people, Dubai became a regional banking center after opening the DIFC in 2004 to attract international banks, asset managers and insurers with promises of zero taxes for 50 years. Firms such as Goldman Sachs Group Inc. and Citigroup Inc. have their regional offices there, as well as local lenders such as Emirates NBD PJSC.
The center is facing growing competition from cities such as Riyadh and Doha, which are also setting up their own financial hubs. The U.A.E. capital set up the Abu Dhabi Global Markets free zone in 2013 and has ambitions to develop it into a global financial business hub.
It’s also growing even as the global financial services industry struggles with a rising regulatory burden and lower profitability. Half a million jobs have been eliminated across the financial industry since the 2008 crisis, according to data compiled by Bloomberg. A further round of job cuts in London is likely this month if client activity doesn’t pick up, according to multiple banking executives, who asked not to be named discussing personnel matters.
Saudi Arabia is developing the $10 billion King Abdullah Financial District, which so far has struggled to attract banks. KAFD, as it is known, was envisaged as a modern financial hub that would bring banks, financial-services firms, auditors and lawyers as well as the kingdom’s stock exchange and capital-market authority into one area.
As of April, not a single financial institution had agreed to take space in the 73 buildings the Saudi state is constructing at the KAFD, according to Waleed Aleisa, chief executive officer and project manager of the district at developer Al Ra’idah. The one lender on the 1.6 million square-meter (17.2 million square-foot) site north of the city center is Samba Financial Group, which bought a plot of land and is building its own tower.