French bank to shut down Dubai broker

Dozens of companies at the Dubai International Financial Centre have stopped operating since the onset of the financial crisis. Paulo Vecina / The National

The Dubai brokerage unit of one of the largest banks in France is closing its office in Dubai's financial centre in the latest sign of malaise in the markets. Two officials at Credit Agricole Cheuvreux, the brokerage arm of the major European bank Credit Agricole, confirmed the company was in the process of closing its office in the Dubai International Financial Centre (DIFC).

Cheuvreux's local staff have informed colleagues of their departure and the company has removed Dubai from its list of offices on its website, although it is still listed as "active" in the DIFC company registry. After a global recession and the Dubai debt crisis, international branches of global financial companies are increasingly reconsidering the viability of running offices in the region, said John Sfakianakis, the chief economist at Banque Saudi Fransi in Riyadh.

"The reason for some of these companies shutting down in the DIFC has to do with limited deal flow," he said. "The business is not there to justify the people on the ground and the deals team and the equity research to support an office." Companies that shut down offices in Dubai were likely to handle any outstanding regional business from their home office, rather than open offices in Abu Dhabi or Riyadh, Mr Sfakianakis said.

Nadege Cartei, a spokeswoman for Credit Agricole Cheuvreux, declined to comment on where the Middle East operations would be based after the Dubai office closure. Cheuvreux is wholly owned by Calyon, which is a part of Credit Agricole Group. Dozens of firms have shut down in the DIFC since the onset of the financial crisis but so far most have been small financial firms and regional offices of larger companies.

The DIFC said on August 31 it had completed a strategic review of the centre to remain competitive as a financial centre and was reviewing a range of features, including rental prices and other fees, to help its tenants. A bond prospectus issued by the Dubai Government this week said registration of companies in the DIFC grew by 15 per cent to 859 companies last year, compared with 744 in 2008 but the total number of companies in the DIFC dropped again this year to 745.

"While the DIFC continues to evolve, we have achieved a very encouraging performance so far this year, especially in light of the global economic backdrop of the last two years," said Ahmed Humaid al Tayer, the governor of the DIFC. When the Cheuvreux team set up in the DIFC in March 2008, it announced its staff would comprise four analysts, one strategist, two regional sales staff and a trader. Credit Agricole, France's largest retail bank and the eighth-largest in the world, will still have an office in the DIFC. The company announced earlier this week it had appointed Albert Momdjian as the head of coverage and investment banking for the MENA region. He was previously the head of Middle East and Africa investment banking.

The bank has 13,000 employees serving clients in more than 50 countries worldwide, according to its website.

* with additional reporting by Asa Fitch