Investment bank Shuaa Capital , hard hit by the global financial crisis, plans to provide shariah-compliant lending to businesses in Saudi Arabia as part of a new strategy to help turn around losses.
Shuaa, which has laid off a third of its staff since 2011 and slashed operating costs, will focus on small and medium enterprises in the kingdom.
Saudi-based Gulf Installments Company will be operated by Shuaa’s subsidiary Gulf Finance Corporation under a management contract with Shuaa, the Dubai-based firm said in a statement. It named David Hunt as chief executive officer of the Saudi venture.
One of the Arab world’s largest investment banks and once a symbol of the sector’s potential in the region, Shuaa is among a group of regional investment firms struggling to stay afloat after a slump in the value of its investment portfolio.
The firm hired ex-ABN Amro banker Colin MacDonald as chief executive in April and is counting on the lending business as part of a turnaround plan under Chairman Sheikh Maktoum bin Hasher al-Maktoum, a member of Dubai's ruling family.
Shuaa, which helped float ports operator DP World several years ago, is hoping that the strategy shift will return the bank to “positive territory” in 2013 after reporting losses for most of 2012.
The Saudi Arabian economy, the largest among Gulf Arab states, is expected to see 4 percent growth in 2013, according to a Reuters poll in January, down from 6.8 percent in 2012.