Suitcase banking will go out of style in region

Suitcase banking, whereby bankers fly into a city, broker or facilitate a deal and return home the next day is commonplace in emerging economies.

Certainly, the financial centres of the Middle East are no strangers to suitcase banking, but as they develop into globally renowned hubs, do these cities need financial institutions to have permanent offices in the Middle East?

From a vanity-based perspective, maybe. But from an operational point of view, the answer seems not.

Some foreign banks, especially those from Europe, retreated as volatility and stricter regulation back home diminished their appetite for risk in emerging economies. Meanwhile, Middle Eastern banks have fully recovered from the financial crisis and are better equipped than ever to fill the gap.

Take National Bank of Abu Dhabi for example. It is now the UAE’s biggest lender and has climbed 17 places from 2012 to become the region’s fourth-largest adviser with $2.9 billion (Dh10.6 billion) worth of deals.

Likewise ADCB has been reportedly leading the deals on $800 million worth of refinancing for Atlantis, a six-year $1.4 billion loan for Jumeirah Group and a $2 billion deal for Investment Corporation of Dubai. Commercial Bank of Dubai, Emirates NBD, Abu Dhabi Islamic Bank and Dubai Islamic Bank have all been involved too.

This kind of success tends to breed success. As a consequence, foreign institutions will find it harder to return to the market since their traditional advantages will no longer appear as competitive.

As a consequence, banks in the Middle East are no longer competing against Geneva, New York or London based banks, but against each other.

Therefore, it will be the competition amongst Arab banks that will grow the financial markets into respected hubs and even global capitals for services such as Islamic finance.

Similarly, the search for talent is no longer focussed on big-name bankers who have a degree of kudos — but bankers that have the experience dealing with government backed entities, Sharia compliance and above all, an ability to develop product capabilities in an emerging economy.

eFinancialCareers is noticing a trend amongst its clients in the Gulf to attract talent from Singapore and Kuala Lumpur or distressed economies such as Greece and Portugal where such experience might reside. From these markets bankers are more ready to commit to the Middle East on a permanent and longer-term basis, especially since index compiler Morgan Stanley Capital International Inc. (MSCI) promoted the UAE and Qatar to emerging markets status, and Dubai won the World Expo 2020.

So is this the end of the suitcase-banker? I’m sure that they will continue to fly in, cherry picking deals. But the playing field has levelled out, local banks have the trust of the market and they will define the Middle East as a seriously respected financial hub — not those banks that might want to return to the market only when times are good.

— The writer is sales manager at eFinancialCareers Gulf.