DUBAI: Leading global investment banks, including Credit Suisse AG , are cutting research staff in the Middle East to save costs amid tough global conditions and a dearth of work in the region.
Japan’s largest investment bank Nomura has shut down its research department, a person with knowledge of the matter said.
Deutsche Bank and Credit Suisse have cut their top equity research jobs for the Middle East and North Africa (MENA) region, four sources said.
"Regionally, (Nomura’s) research department has been closed, given the wider situation of little activity on stock exchanges," said the person familiar with the matter, adding the move affected about five analysts in Dubai and London.
Credit Suisse laid off its London-based MENA equity research head Mohamad Hawa. At Deutsche, MENA equity research head Nabil Ahmed has left the bank.
The sources did not want to be identified due to the sensitivity of the matter.
"Funding for most of the growth areas like the Middle East … came from revenue derived in more developed markets," said one source familiar with the matter.
"That revenue chunk has been significantly hit and there is no doubt that it will continue to be hit in the short term.
"Even though these banks think the growth is here, they will be forced to cut in the absence of any significant business from these markets."
Nomura and Credit Suisse declined to comment. Deutsche officials were not immediately available.
International banks have flocked to the Middle East in recent years, lured by the oil-rich region’s growth prospects and the lucrative fees available, from taking companies public to advising on sovereign fund deals.
But increased competition and the financial crisis has reduced prospects. Amid that backdrop, bankers say more staff from the region may be shifted to other locations or laid off.
"Banks in the region escaped the first round of job cuts this year but a second one is coming for sure and it will be hard to avoid this one. The pressure to cut costs is intense," one Dubai-based banker said.
Total value of completed deals in the Middle East stood at almost $14.2 billion in the first half, a 65 percent slump versus the year-ago period, according to Thomson Reuters data. No bank mergers have been completed in the last two years.
Global banks have also been hard hit by a sovereign debt crisis in the euro zone and economic slowdown in the US, adding pressure to cut thousands of jobs.
Credit Suisse plans to cut around 2,000 jobs after weak trading activity and the strong Swiss franc hit its second-quarter results.
Deutsche Bank CEO Josef Ackermann said that if weaker market activity seen in August continued in September and October, the bank would have to think about job cuts.
Nomura is set to cut several hundred staff with the bulk of lay-offs in Europe, a person familiar with the matter said last week.
