Sadly, Arcapita seems likely to implement more job losses, but some investment banks are hiring
Employees at Bahrain's Arcapita Bank have long been in a precarious position, with the firm implementing a headcount reduction of 15% last year, but its move to file for Chapter 11 in the US yesterday could mean more redundancies.
In a rare move among Middle East companies, Arcapita announced that it had filed for bankruptcy protection after failing to agree a restructuring package with creditors for a $1.1bn debt falling due on 28th March.
In a statement released yesterday, Atif Abdulmalik, chief executive officer of Arcapita said: "The actions of certain non-bank creditors have precluded Arcapita from reaching such a consensual resolution before the March 28th maturity date, jeopardizing Arcapita’s ability to satisfy its fiduciary duties to its stakeholders.”
The FT suggests that hedge fund investors are calling for repayment in full and the bankruptcy filing is an attempt to protect its $3.6bn in global assets from any legal challenge.
Arcapita doesn't employ huge numbers of staff – it had 275 employees across its offices in Atlanta, Bahrain, London and Singapore as at the end of June 2011. This figure has reduced from around 340 people in 2009.
The firm's accounts suggest that staff costs remain high despite the job cuts. It spent $17.6m on staff from July to September last year, compared to $16.9m during the same period in 2010. Meanwhile, its investment bank slipped to a loss of more than $3m (compared to a $1.4m profit in 2010).
Any job losses in Bahrain require government approv
al, but considering Arcapita's current predicament, further redundancies seem inevitable.
There is some good news elsewhere, however. Large wholesale banks are looking to fill the void left by the departure of international investment banks and boutique local players – and they're hiring. In particular, First Gulf Bank and National Bank of Abu Dhabi are believed to be recruiting.
