Big redundancies at Gulf Finance House are a sad inevitability

The tribulations of Gulf Finance House, which has been weighed down by debts of more than $400m over the last year, have been ongoing. However, as its Q3 results starkly demonstrate, the worst is far from over. Significant redundancies seem inevitable.

In the last quarter to the end of September, GFH posted a loss of $115.1m compared to a deficit of $29.3m in 2009. Much of this is down to the $81.5m put aside for impairment allowances, but total income came in at $633k compared to $3.2m for the same period last year.

GFH's story is typical of many Bahraini investment houses, which fell foul of the regional property crash in 2008. The banks' business model is based around earning fees on investor money raised for private equity and property projects.

Since Ted Pretty took over in December last year, however, the group began a massive restructuring programme, which is likely to see significant divestment and disposal of assets to service its debts.

So, where does this leave its employees? On very shaky ground unfortunately. At its peak in 2008, GFH employed 270 people, a figure which shrunk to 207 by the end of last year.

In an interview with MEED earlier this month, Pretty said that he viewed the "optimal size of this bank as around 70-80 people" and that he expected to reach this figure in the first quarter of 2011.

Given the outrage in Bahrain when Gulf International Bank decided to make 57 people redundant in 2009, GFH faces a difficult period of restructuring. Pretty seems to be doing his best to mitigate the backlash by saying he plans to strip out the expat workforce, and ensure the majority of employees are Bahrainis.