Three firms end operations in DIFC

Dubai: In a sign financial services companies operating in Dubai may be coming under pressure from the global meltdown, three firms have terminated their operations in the Dubai International Financial Centre (DIFC).

The Dubai Financial Services Authority (DFSA), the DIFC's regulator, said yesterday it has approved requests for voluntary withdrawal of licences from three "authorised firms" to carry on financial services in or from the DIFC.

Jefferies International Limited was deregistered on December 17, Wedge Alternatives Limited on December 21, and Alternative Investment Strategies Management (Dubai) Limited on December 23, according to a statement.

A spokesperson said the regulator had no further comment on the issue.

The DFSA supervises 244 financial companies, 50 ancillary service providers and 16 auditors among others.

A representative of Alternative Investment Strategies Management said the decision to end operations in Dubai was part of a "global evaluation of priorities" by the company's head office and it "does not mean a lack of confidence in Dubai."

He did not say how many people the Mauritius-registered European company, which was given a DIFC licence on April 15 last year, employed except to say that "it was a small operation."

Wedge Alternatives Limited, which also received its licence last year in April, could not be contacted for comment.

Jefferies International Limited was a part of the middle market US-based investment bank Jefferies Group.

The group said earlier this month it would slash 15 per cent of its staff globally and close offices in Dubai, Singapore and Tokyo to cope with the business downturn.

In October 2006, Jefferies had identified the Middle Eastern and North African market as having the potential "to be one of the main global markets for capital formation."

A senior investment banker working for a European bank expects most companies to maintain their DIFC operations because the zone with its separate regulatory regime remains an attractive offshore base for financial sector companies.

"You can be physically in Dubai but functionally offshore so that gives you an edge," he said on condition of anonymity and added that offices based in the DIFC "will become lean" as companies try to cut costs in the downturn.

Some 300,000 jobs have been lost in the financial sector globally since Wall Street bank Lehman Brothers went bankrupt and the investment banking segment has been hard hit.

"Investment banking is a dying business," the banker added.