business / banking

UAE banks slashed branches and jobs in 2019

Consolidation reduced total workforce by 930 and branches by 49

The UAE Central Bank in Abu Dhabi. The mergers and consolidation in the UAE’s banking sector has seen some reduction on total number of bank branches and bank employees according to the Central Bank of UAE’s quarterly review report for the third quarter of 2019.
Image Credit: Gulf News Archives

Dubai: Mergers, consolidation and digital transformation in the UAE’s banking sector have seen some reduction on total number of bank branches and bank employees according to the Central Bank of UAE’s quarterly review report for the third quarter of 2019.

In the third quarter of 2019, licensed commercial banks decreased by one, due to a merger between two local banks, reaching 59 in total.

Currently there are 21 national banks and 38 are foreign banks, including 11 wholesale banks operating in the UAE.

The number of branches of national banks declined by 49 to 664 at the end of September 2019 compared to 713 at the end of June 2019. The number of retail foreign banks remained the same at 27 compared to the previous quarter, while their branches also remained the same at 80 compared to the previous quarter.

Job losses

The central bank report showed that the banking sector consolidation has seen the number of employees in national and foreign banks declining from 36,448 employees in at the close of the second quarter of 2019 to 35,518 employees by the close of the third quarter of 2019.

“In addition to the M&A deals in recent years, margin compression is also forcing banks to cut down on operating costs resulting in some amount of job losses and reduction in branch numbers in the sector,” said a banking sector analyst.

Digital transformation and technology adoption are also helping banks to reduce number of branches and in some cases headcounts. Most banks insist job losses are minimal due to redundancies arising from technology adoption and digitisation and most of the staff are redeployed in new functions.

Soundness indicators

The central bank report observed that overall soundness of the banking sector remained positive during the third quarter of 2019. Banks operating in the UAE remain well capitalized, with the Capital Adequacy Ratio (CAR) at 17.7 per cent, Tier 1 Capital at 16.5 per cent and Common Equity Tier 1 (CET 1) at 14.7 per cent.

Meanwhile, the eligible liquid assets at remained at 17.6 per cent at the end of Q3 2019. This level of liquid assets constitutes an adequate buffer about the 10 per cent regulatory minimum required by the CBUAE. The level of total liquid assets at banks, as of the end of the third quarter, stood at Dh430.6 billion, Dh7.9 billion higher compared to the end of Q2 2019.