Saudi's expat cull would stall the banking industry
The Saudi banking sector's heavy reliance on expat talent (combined with its ongoing quest to seek out skilled local candidates) is a going concern. But with rising unemployment in the kingdom, pressure is mounting to sack legions of foreign workers. Is it about to shoot itself in the foot?
In some rather astounding reports this month, Saudi newspapers quoted deputy interior minister Prince Ahmed Abdul Aziz as saying a simple solution to growing unemployment among locals would be to "dispose of one million foreign workers and the Saudis who replace them can do their jobs properly".
The private sector, in particular, favours expats - non-Saudi employees made up 90% of the workforce in 2008, according to a report released last month by Banque Saudi Fransi. Negative sentiment wasn't helped by an HSBC report showing that expats enjoyed an opulent lifestyle in the kingdom.
But the investment banking sector faces a quandary. Most firms want (and indeed are required to) recruit locals, but a lack of skilled candidates means those able to do the jobs are regularly poached by rival firms.
Alternatively, banks make token efforts to recruit Saudis ill-equipped for the position and are then required to support them by hiring sufficiently skilled expats (which is a challenge in itself).
"The biggest issue we face is finding qualified Saudis that understand the basics of corporate finance and investment banking more generally," says one mid-ranking investment banker in Saudi. "The best and brightest candidates are likely to have studied outside of KSA, and will often be lured by the international bulge bracket banks. The local investment banks will always face difficulty getting the best Saudis, but it is very, very challenging to find locals who are qualified."
If banks are relying on locals schooled outside of Saudi, clearly steps need to be taking to address the kingdom's education system - a point acknowledged by industry experts during the Reuters Middle East Investment Summit last year.
What's more, Saudi is already viewed as something of a hardship posting by expat bankers, so gaining a reputation as country that's hostile to foreign workers long before a developing viable succession plan is both unhelpful and unfeasible.
"There remains a huge bun fight among local banks for Western-educated Saudis with investment banking experience," says one Saudi-based financial services headhunter. "It's a skill-set that's practically non-existent among locals."
