UAE lender Emirates NBD plans 15 percent staff cut
Emirates NBD, Dubai's largest bank which has been grappling with impairments, plans to lay off up to 15 percent of its workforce, three sources familiar with the matter said on Monday.
March 13, 2012 2:22 by Reuters
“There has been no official communication from the bank yet to the employees but around 15 pct of employees will be let go as part of the move. This is said to be a board decision and there have been some cuts already this week. It was pretty unexpected,” a source at the bank said.
The bank has 8,000 employees, according to its website.
“It’s 15 percent across the board, no specific departments are targeted at the bank. The goal is to cut costs by 15 percent. Layoffs will be done this week,” another source said.
The lender posted a 62-percent decline in fourth-quarter net profit, as provisioning due to exposure to Dubai government-linked entities hurt its performance. [ID:nL5E8DF03P}
ENBD, 55.6-percent government owned through the Investment Corporation of Dubai, was ordered by Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum in October to take over loss-making Dubai Bank, which had been rescued by the emirate’s government earlier in 2011.
ENBD, created in a 2007 merger between Emirates International Bank and National Bank of Dubai at the behest of Dubai’s ruler, has suffered due to its role as lender of last resort to Dubai state-linked firms.
The Gulf Arab emirate is slowly recovering from a debt crisis that brought it to its knees in 2009.
A last-minute bailout from Abu Dhabi helped Dubai avoid an embarrassing default then and it’s wealthier neighbour stepped in again last month.
The UAE federal finance ministry gave it a 2.8-billion dirham ($762 million), eight-year loan at below market rates to help absorb the Dubai Bank acquisition, Surya Subramanian, ENBD’s chief financial officer, said last month.
Adding to the bank’s provisioning burden is Dubai Group, part of Dubai ruler’s personal investment vehicle, Dubai Holding , and which is renegotiating $6 billion in bank debt. The latter is part of a wider $10 billion debt restructuring at Dubai Group.
In June, Dubai’s ruler named his uncle and close adviser, Sheikh Ahmed bin Saeed al-Maktoum, as chairman of Emirates NBD. Sheikh Ahmed is a key figure in the emirate and has been the face of its debt clean-up efforts. (Reporting by Dinesh Nair and Mirna Sleiman; Writing by Amran Abocar and Firouz Sedarat)