Shuaa is making more cuts, but expanding its SME business
It says a lot about the changing priorities at Shuaa Capital that the safest place for its employees this year is within its SME lending business.
The story of 2011 for the regional institution was one of downsizing. Its headcount reduced by 39% throughout the course of 2011, or 111 employees, and a further 55 redundancies are planned in the first half of this year.This means just 130 employees will be left at the bank - a fall of more than 50% from its 2011 headcount of 285.
This is hardly surprising when you see Shuaa's full-year results. It was AED293.7m ($79.9m) in the red for 2011 when all impairments are taken into account, and this follows a loss of AED223.7m for 2010.
The majority of the job pain has been felt within its retail brokerage division, which Shuaa decided to exit last year in order to focus on institutional business. It shut down its brokerage operations entirely in Jordan and Egypt and scaled back those in Abu Dhabi and Riyadh. When all the restructuring charges are taken into account the division recorded loss of AED129.9m.
The only two business areas to post positive results were its asset management business (assets under management increased by 25%, to AED850m, and profits were up to AED5.2m for 2011) and its SME finance business, Gulf Finance, where profits of AED23.4m were largely on a par with 2010.
Shuaa's investment bank, previously the group's crown jewel, is still languishing under the lack of appetite for M&A or equity capital markets activity and posted a loss of AED14.4m for 2011, compared to a loss of AED3.2m in 2010.
Instead, Gulf Finance has been posited as the "main revenue driver for the business" and Shuaa is planning on building this business in 2012. In contrast to other areas of the bank, headcount within the SME finance division increased by 15% to 85 employees last year.
The division will be sheltered from Shuaa's "right-sizing" initiatives, and the plan is to expand (particularly in Saudi Arabia) throughout this year.
Overall, Shuaa expects to save AED46m after all the redundancies are implemented.
