Bonfire of the brokerages
Now is not a good time to work as a broker in the GCC. Slumping trading volumes, which last year saw a number of firms collapse or make redundancies, have continued into 2010 and further closures are expected.
The plight of Dubai's brokerage houses was highlighted by Bloomberg, which suggested that a four-year low of stock trading volumes has seen some firms fall by the wayside and most pare back staff numbers to cope with tumbling profits.
At the (very) pessimistic end, Shuaa Capital has suggested that the number of firms could shrink from 81 to 55 - a figure that doesn't appear too unrealistic considering that 12 firms have put in a request to the Securities and Commodities Authority to halt operations already this year.
One such firm was Abu Dhabi-based Makaseb Islamic Financial Services, which last week announced that it had frozen its operations for a year and cut 60% of its staff.
"We thought it would be unwise to continue operations and incur losses, especially when we don't see a turnaround happening soon," said Hatim el-Atabani, its managing director.
Research released earlier this year by Truth Economic Consultants, suggested that net profits of regional brokerage firms shrunk by 87% in 2009 and that a raft of mergers was needed to keep smaller players afloat.
Not surprisingly, a large number of brokers are considering their options.
"It's a commission-driven industry and many brokers are living on small base salaries with little in the way of bonus," says Peter Greaves, director of financial markets at headhunters McArthur Murray. "Some are eyeing a move to private banking or corporate banking, which would leverage their relationship skills, but it's doubtful whether their connections are deep enough to make a successful switch."
Within the senior ranks, however, there has been some movement at larger firms. Shuaa Capital named Walid Shihabi as head of its brokerage unit last month, and Global Investment House has appointed Fouad Fahmi Darwish as head of brokerage for the Gulf region.
