Monday, Feb 13, 2012

--4Q loss narrows but revenues continue to decline

--Says it has reduced headcount and related costs by 39%

--Still looking for opportunities to develop its business model

(Adds headcount number, further job cuts in paragraph 4)

By Nicolas Parasie

Of ZAWYA DOW JONES

DUBAI (Zawya Dow Jones)--Dubai-based Shuaa Capital (SHUAA.DFM) on Monday posted another quarterly loss as the regional investment bank continues to struggle and cut costs in a bid to offset a major slowdown in revenues.

Shuaa reported a fourth-quarter net loss of 111.9 million U.A.E. dirhams ($30 million), compared with a AED186.7 million loss in the year prior, mainly because it booked a big loss on its investments in the year-ago period. Revenues in the three months ended Dec. 31 more than halved to AED20.1 million, from a year earlier.

Once hopeful of becoming a regional investment banking champion, Shuaa Capital in the past few years posted hefty losses as it battled with the fallout from a regional real estate downturn and a global economic slowdown.

The bank embarked on an aggressive plan to cut costs by slashing jobs, closing offices and looking for new business opportunities. Shuaa said it has reduced headcount to 174 from 285, or annual savings of AED46 million. It added that it would cut another 55 jobs, mainly at its brokerage division, in the first half of this year.

Along with the strategic changes, a large portion of the bank's senior management have left. Shuaa now hopes to reverse the tide by focusing on providing sales and trading services to institutions, family offices and high-net-worth-individuals.

But its planned recovery path has been clouded by the twin burden of geopolitical unrest in the Middle East and the Eurozone debt crisis.

"During the year 2011, the financial services industry continued to witness market disruptions and significant changes to the competitive landscape. These events led to a difficult operating environment, predominantly in the retail brokerage business," Shuaa said, adding it closed its brokerage offices in Jordan and Egypt, while reducing its presence in Abu Dhabi and Riyadh.

Shuaa's full-year net loss widened to AED293.8 million from AED223.7 million in 2010. The company said most of this loss, AED129.9 million, is due to the restructuring of its brokerage operations.

Looking forward, Shuaa said there are still opportunities to develop its business model and to generate more sustainable results.

"Our determination to seize the opportunity of repositioning Shuaa as the leading financial services platform in the Middle East remains undiminished," chief executive Michael Philipp said in a statement.

Shuaa shares last traded 9.1% higher at AED0.740.

-By Nicolas Parasie, Dow Jones Newswires; +9714 446-1690; tim.falconer@dowjones.com

Copyright (c) 2012 Dow Jones & Co.

(END) Dow Jones Newswires

13-02-12 0934GMT