Bahrain's Arcapita slashes jobs as losses begin to bite
Islamic investment house Arcapita is slashing jobs in an effort to keep a lid on costs after the economic downturn outlasted expectations, a company spokesman told Reuters.
Bahrain-based Arcapita has cut its headcount by about 15 per cent in recent months across its four offices in Manama, Atlanta, London and Singapore, the spokesman said.
The group employed 339 staff as of September 2009, according to its website.
Job cuts at banks are a sensitive issue in Bahrain and need to be approved by the central bank and the government. Bahraini investment houses have generally denied taking this measure, even though balance sheets show some have halved staff costs.
Arcapita is struggling with a rapidly deteriorating balance sheet caused by a slump in placement fees and plummeting asset values as a result of falling property prices.
It lost $159 million (Dh583.5m) in its fiscal 2010 second quarter, ended December 31. Bahraini competitor Gulf Finance House also recently said it made lay-offs to cut costs.
Like many asset managers in the region, including Gulf Finance House, much of Arcapita's income came from upfront fees on transactions on behalf of asset management clients during a regional real estate boom that ended in late 2008.
But those transactions dried up as the regional economy deteriorated, sending revenues tumbling. Arcapita total income for its most recent quarter was under $13m, down from almost $102m a year earlier.
The company has been hit by a double whammy because it also co-invests with its clients in many transactions, so falling valuations have also pummelled the balance sheet.
Earlier this week, the company announced the launch of a $500m property fund in a joint venture with Al Rajhi Capital, the investment arm of Saudi Arabia's Al Rajhi Bank, which the companies will seed with $50m. Arcapita did not specify if it will make a cash payment into the fund.
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