x Abu Dhabi, UAESaturday 20 January 2018

Bull market for top-talent hunters

Investment banks are cutting thousands of jobs worldwide, leading to a buyer's market for senior executives among Middle Eastern lenders that can afford to hire them.

A bull statue stands in the Financial District near the New York Stock Exchange in New York, U.S. Daniel Acker / Bloomberg News
A bull statue stands in the Financial District near the New York Stock Exchange in New York, U.S. Daniel Acker / Bloomberg News

Local banks are on the hunt for new talent, as lay-offs at major investment banks lead to increased opportunities for Middle East financial institutions to grab senior executives.

Investment banks in the United States have announced tens of thousands of job cuts during the past two years, replacing more senior staff with younger and cheaper employees and switching trading floors for algorithms to save costs.

That has given Middle East banks a prime opportunity to attract experienced senior executives, said Salmaan Jaffrey, a director at PricewaterhouseCoopers' regional financial services practice.

"The last nine months or so have been a buyer's market for executives and that's especially the case on the investment and wholesale banking side," he said.

"There's a step change in the quality and seniority of bankers here. Banks have been able to pull in senior people."

Wall Street companies have announced 26,352 job cuts this year, almost double last year's total, according to a report from Challenger, Gray & Christmas, an executive recruitment firm in the US.

"The situation in Europe is far from being resolved and ongoing weakness here could continue to take a toll on the financial sector," said John Challenger, the firm's chief executive.

"Making matters worse is evidence that some big banks did not learn anything from the 2008 collapse and continue to make bad bets resulting in massive losses."

Middle East banks such as National Bank of Abu Dhabi or Qatar National Bank, by contrast, have been propped up by cash-rich Arabian Gulf governments and have recently escaped downgrades to their credit ratings, making them comparable with, or better than, many of the former titans of global finance.

Among the international firms with significant local operations, Deutsche Bank is seeking to cut 1,900 jobs worldwide, while Morgan Stanley is shedding about 700 staff.

Morgan Stanley declined to comment on whether the job cuts would affect staff in the Middle East.

A Deutsche Bank spokesman declined to comment on specific job cuts in the region but said its operations in the Middle East and North Africa had performed well in the past few years.

"The bank continues to look to grow in the region while at the same time look at ways to maximise operational efficiency on an ongoing basis," he said.

Despite that, the threat of looming job cuts has contributed to a tense atmosphere in the Dubai International Financial Centre (DIFC).

Banks including Barclays, HSBC, Nomura and Bank of America Merrill Lynch shed large numbers of staff in the UAE last year as a result of plunging deal volumes.

"Everybody's looking over their shoulder," said one banker in Dubai at a firm that recently announced job cuts. "It really depends on the business line that you're in."

While bond markets have surged this year, making it the best year on record for sukuk sales, equity markets have dwindled amid a prolonged slump in volumes.

Deal-making, expected to be on the cusp of a boom when international firms set up offices in the DIFC in 2006 and 2007, has been weaker in reality in the wake of the global economic meltdown.

For many firms, that has meant transferring senior bankers to cover the Middle East from London or Paris instead.

There has been a "realignment of select investment banking staff back to markets where business is still supportive", Mr Jaffrey said.

The crash diet of the world's once bloated investment banks presents challenges for the Gulf's financial centres but the DIFC is reacting by focusing more on attracting Asian firms than slower-growing western competitors.

Last year, the number of companies operating in the free zone increased 5.7 per cent to 817, while the number of full-time employees grew by 14 per cent to 12,945.

The majority of financial companies establishing themselves in the centre during the past two years have been firms from Asia and other emerging markets, said Abdulla Al Awar, the DIFC Authority's outgoing chief executive.