Shuaa Capital eyes fee income boost and 2010 profits

UAE's Shuaa Capital aims to triple its fee income in the next three years, as the investment bank focuses on its domestic market and Saudi Arabia, which it hopes will make the bank profitable again in 2010.

The Dubai based group suffered heavy losses in 2009 as a result of the financial crisis. Its fourth quarter net loss narrowed to $42 million from a $157.20 million loss a year earlier.

Shuaa is one of the largest regional investment banks.

After years of expanding regionally and abroad, the group was hit hard by the global downturn as impairments related to troubled assets erased profits.

Shares slumped 7.5 percent on Sunday to their biggest one day fall since mid December, but closed 3.2 percent higher on Monday.

The company in 2009 was also embroiled in an acrimonious legal dispute with Dubai Banking Group, part of Dubai Holding, which led to the latter obtaining a 48.4 percent stake in Shuaa.

Shuaa's troubles culminated in a management shake-up, with the head of investment company Dubai International Capital (DIC), Sameer al Ansari, taking the helm in August. Ansari remains a non executive chairman at DIC.

In a conference call with analysts and reporters, Ansari said: "My first focus as CEO was to stop the bleeding, whether people, clients or money."

Ansari said Shuaa's objective was to triple fee income over the next tree years and to become profitable in 2010.

In the fourth quarter, Shuaa said its brokerage, asset management, finance and private equity business turned profitable, but impairment charges offset these profits in 2009.

Ali Khan, managing director and head of brokerage, Arqaam Capital, said: "It's reflective of the challenging environment for investment banks, there are currently no major fees to be made in terms of IPOs (initial public offerings) ... That window is closed."

The group's finance director Paul Kelly said Shuaa has 10 mandates, which it hopes to carry out this year, including one IPO in the UAE expected in the first half.

A spokesman for the group said the mandates include IPOs, private placements and advice on mergers and acquisitions.

Khan said: "It's difficult to identify positive catalysts in the short term. However, we may see some positives in getting more colour on (Shuaa) strategy and how they will respond to the current environment in which they operate." (Reuters)