MIDDLE EAST MOLE: The long-awaited renaissance is still a long way off

If we take some of the headlines appearing in regional media in the Middle East at face value, you'd assume we're well on our way to business as usual and the good times are about to return.

It's true that a large number of international and regional financial services firms, including banks, asset managers and private equity funds, unveiled some senior appointments in recent months. What's more Q3 is traditionally the more active recruitment period and, with the low business confidence levels of 2009 behind us, this returned again in 2010.

But if you bothered to tally these people moves, you'd realise it's still a relatively small number and, in the majority of cases, this was more replacement than expansion.

The leading indicator of the health and prospects of any country's financial industry is the banks and this is particularly the case in the UAE considering their dominance compared to other sectors. What's been happening in recent months?

Transparency and openness are not concepts one would associate with the region's banking sector, but we have been given a few glimpses and it's not great. With a much reduced fee pool, a static cost base and continued impairment charges related to soured loans, there's little chance of a hiring frenzy.

And, from my closed-door discussions with senior banking executives and board members, it's clear that the environment remains tough. Targets for 2010 were only marginally raised from the depressed levels of 2009 and are still not being met.

While many people were laid off in 2009, banks are still overstaffed, with many sitting around twiddling their thumbs and researching the next great iPhone app, steadily sapping the limited fee income.

The stark reality is that it's a still grim time to be an investment banker in the Middle East. The fee income isn't big enough to feed all the mouths, there's no increase in recruitment budgets and bonus pools are starved (and in several instances committed to hires earlier in the year). What's more, the lack of deal flow gives little opportunity for those employed to prove they're worthy of promotion - the long-awaited renaissance is still a way off.

Those unlucky enough to still be searching for new homes face fierce competition for the few positions that have actually been made available. Most prospective employers are specifying an ever increasing and demanding skill-set. For example, anecdotally a PE fund was looking to fill in a VP role with someone who spoke 4 languages (English, Arabic, Turkish and Urdu), had 12 years of experience, a minimum of 10 PE deals under their belt and 3 references in the last 12 months.

Don't worry, I have it on good account that these requirements may be somewhat amended - upwards; they also need someone with deal experience in North Africa!

This may not be news to anyone facing this stark reality in the industry. As I noted previously, hiring throughout the whole year has been unexciting at best. As this year comes to an end, we can only hope that the slow increase in confidence to date gathers speed and eventually its own momentum in 2011.

Jamal Bahir (a pseudonym) is seasoned senior private equity and investment management industry veteran based in the Middle East and Europe. He is an advisor to several ruling and trading families from the Middle East, as well as select European governments and private equity funds, advising on their investment, financial and regional political strategy. The author may be reached on jamal.bahir@gmail.com.