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Thu 11 Dec 2008 11:53 AM

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Shuaa Capital announces job cuts

UPDATE 1: Rating agency Moody's set to review credit standing of UAE's biggest investment bank.

Dubai-based investment bank Shuaa Capital will cut 21 jobs, or 9 percent of staff in Dubai, and expects to post a profit in 2009, the company said in a statement on Thursday.Shuaa said the affected employees were based in Dubai, the majority being in middle and back office positions and from non fee-based businesses.

The company's shares have shed over 70 percent of their value in 2008.

The group posted a net loss in the six months to end-September of $101 million, according to data released in October.

The news comes as credit ratings agency Moody’s said on Thursday it is considering downgrading the UAE’s largest investment bank on fears the group could post further losses amid the global meltdown. Shuaa’s Baseline Credit Assessment (BCA) is 11, which is measured on a scale of 1 to 21, with 1 reflecting the lowest level of risk, Moody’s said in a report published on Thursday.

“The rating review also reflects the increasing pressures on Shuaa's BCA of 11, which Moody's will be reassessing in light of developments in the financial sectors in which Shuaa operates and which it may adjust if investment losses escalate further,” the report said.

The rating review will be conducted within three months or after Shuaa’s EGM, due at the end of January, Moody’s added.

Moody’s said it was reviewing Shuaa’s rating due to a large number bonds owned by Dubai Banking Group (DBG) which were not converted into shares at the end of October.

DBG, which had been scheduled to own 32 percent of Shuaa when the bonds matured on Oct. 31, is an investment arm of the Dubai government, and is 70 percent owned by Dubai Holding and 30 percent owned Emaar Properties, the largest developer in the Middle East.

DBG is currently in negotiations with Shuaa to extend the maturity of the bonds by up to two years.

Shuaa, founded in 1979, is involved in everything from asset management to private equity and had $1.59bn of assets under management at the end of September this year.

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