Business | Banking
Gulf banking sector faces acute human resource crunch
As if the geysers of oil were not sufficient, Gulf countries, and some hedge funds, are unexpected beneficiaries of the meltdown of the US subprime mortgage market.
- By Robin Wigglesworth, Financial Times
- Published: 00:04 July 21, 2008
As if the geysers of oil were not sufficient, Gulf countries, and some hedge funds, are unexpected beneficiaries of the meltdown of the US subprime mortgage market.
While US and European banks are shedding tens of thousands to shore up earnings, Gulf banks face a crisis of a different sort - an acute lack of human resources.
Stories abound of entire trading desks in Dubai being lured away by competitors offering two-year guaranteed bonuses. According to one asset manager, the average time spent at a financial institution in the emirate is less than a year.
The international financial services industry has cut about 83,000 jobs, according to reports. For Middle Eastern banks this is quite an opportunity.
Jim Beck, head of human resources at Shuaa Capital, a Dubai-based investment bank, receives 20 to 30 applications a day. "Dealing with them all is a full-time job," he says. "When we advertised an analyst position, we received 45 applications on the first day."
It is not only people who have lost their jobs who are looking to move. While house prices tumble and bonuses are cut, the pay packages of those still in work in the financial services industry may drop by as much as 20 per cent this year, according to an April survey by Smart Cube, a Chicago-based consultancy.
Bonuses
Not so in the Gulf, where bonuses are expected to remain attractive.
"There are literally waves of people relocating," says Kristi Edwards of Hughes Castell, a legal recruitment company in London. "What is happening over here is quite scary, and the Middle East is booming." In the absence of taxes, salary packages have always been attractive.
But until recently a job in the Middle East was seen as a hardship posting - or the result of an inability to hold down a job in a more dynamic financial centre such as London or New York.
Gulf states are investing billions of dollars in tourism, culture and infrastructure. These investments are designed to attract not only to tourists but also the accelerating inflows of expatriate professionals.
Attractive Dubai
Dubai is proving a particular draw. Since the start of 2007, the Dubai International Financial Centre (DIFC) has more than doubled its number of members to 675.
When the DIFC was being completed, it was hard to envisage how it would turn out, says Nigel Sillitoe of Thames River Capital. "There was a little Starbucks coffee shop and a few people walking around. It was like a ghost town," Now the situation is different. The corridors and hallways of the financial centre are thronged with financial professionals. To meet demand for parking, the centre is building a subterranean carpark that will house 35,000 vehicles.
It will be the world's biggest when completed in 2010.
But as much as the Gulf is booming while traditional financial powerhouses suffer, doubts persist whether there is enough business to go round.
Stiff competition is bringing down fees, while the battle for staff is fuelling wages and shaving margins. The promised listings of family-owned firms in the Middle East have largely been absent, mergers and acquisitions remain far and few between, and caps on foreign ownership in many equity markets limit the scope for capital markets earnings.
Another drawback in the Gulf offering, as far as many mature professionals are concerned, is the limited number of places in high-quality schools.
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