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Sat 15 Oct 2011 05:03 PM

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Reversal of fortunes

Michael Phillip is banking on the Gulf’s super-rich to lead a turnaround at Dubai’s Shuaa’s

Reversal of fortunes

Michael Philipp, a former Credit Suisse banker and the newly
appointed head of Dubai's Shuaa Capital is eyeing a turnaround at the
struggling investment bank by shifting focus to high-networth and institutional
clients.

Philipp, previously chairman and chief executive officer of
Credit Suisse's Europe, Middle East and Africa business and earlier Middle East,
Africa head at Deutsche Bank, was hired to the top job at Shuaa last week,
replacing Sameer Al Ansari.

One of the Arab world's largest investment banks and once
symbol of the sector's potential in the region, Shuaa was hit by the global
financial downturn, with asset impairments erasing profits. Its stock has fallen
37 percent year-to-date.

"After more than 20 years in banking, I had more or
less decided that I was finished with financial services, but to build a
regional financial services business is an interesting challenge for me," said
Philipp.

Philipp said the firm would now emphasise offering asset
management and advisory services to rich individuals, family groups and
institutions in the region, shifting its focus away from retail customers.

"We want to create a regional investment platform. It's
something at which no global bank has succeeded so far in the region," he
said.

Shuaa will look at regions where it has existing licences to
operate like Saudi Arabia, UAE and Kuwait, Philipp said.

The company posted a small second-quarter net profit in
July, helped by aggressive cost cuts and strength in its asset management
business but it has struggled to grow its revenues which have rapidly fallen
amid slumping trading volumes and lack of capital market activity.

Investment banks operating in the Middle East have seen
their fees dwindle sharply as companies have backed out of plans to raise debt
and make acquisitions in the backdrop of a bleak outlook for the global
economy.

Overall investment banking fees declined by 35 percent to
$316.6m in the first nine months of the year, compared with $483.8m in the same
period last year.

Local banks like Shuaa, EFG Hermes and Global Investment
House have faced increased competition from global banks.

Philipp, a personal friend of Sheikh Maktoum Hasher Al
Maktoum, a member of the ruling family in Dubai and Shuaa's chairman, said the
task would not be easy amid the gloomy outlook for economy and investment
banking globally.

"It takes around 18 months to change reputation and
three to five years to build a stable business. I am not trying to change this
overnight," he said.

He said the company still planned to carry out acquisitions
even though he did not see one imminently, and said that he would definitely
consider committing his own money to Shuaa's business in the future.

Last month Shuaa, which helped float ports operator DP World,
said it was in talks with a number of target companies after sources said the
company was eyeing brokerage buys in Egypt.

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