Middle East financial services: What was hot, and what was not, in 2010?
Unfortunately for the majority of people in the GCC's financial sector, the much anticipated recovery never really emerged in 2010. Things have improved, generally speaking, but some areas have fared better than others. Here's our assessment of the ups and downs of this year.
2010 was a good year for....
Those with aspirations to work for a Big Four accountancy firm
Early in the year, it emerged that PwC had been looking to usurp Ernst & Young as the preeminent Big Four accounting firm in the Gulf and had - throughout 2009 - been poaching from other firms and relocating senior employees from Western markets.
Of course, all of this was retrospective, but as 2010 wore on it was clear that the other Big Four accountancy firms also have ambitious expansion plans for the region going forward.
Both PwC and Deloitte unveiled hiring plans for the Middle East, with the former saying it wanted to double in size over the next two years.
Not to be outdone, E&Y announced it plans to recruit 2,000 people next year. Understandably, recruiters are pointing to a shortage of talent.
Wealth management
It's something of a cliché to suggest that wealth management recruitment in the Middle East is booming, whilst other facets of the financial industry in the region flounder.
After all, it's an easy one to justify - wealth in the region continues to grow, so demand for private bankers remains robust. According to the Merrill Lynch Capgemini World Wealth Report, the number of HNWIs in the Middle East has returned to 2007 levels and their overall wealth has increased by 5.1%.
Banks have been building their private banking functions - Standard Chartered and Emirates NBD continue to recruit in decent numbers, while Merrill Lynch Wealth and Royal Bank of Canada have added to their teams. Abu Dhabi Islamic Bank, Barclays Wealth, Citi Private Bank, HSBC and UBS have all made senior hires this year.
In reality, though, it's been less about aggressive expansion and more about entering new markets. Those without a regional presence started-up, more local banks entered the space, international banks tapped new markets like Abu Dhabi and Saudi Arabia, while more firms - such as Al Rajhi Capital - have been looking to capitalise on growing female wealth in the region.
Wealth management recruitment may not be booming, but it's certainly healthier than most sectors.
Equity research
Towards the end of 2008, equity research wasn't a great place to work. As a non-revenue generating area of the business, lay-offs were commonplace. This year, however, there's been something of a resurgence in recruitment.
Local players were breaking into new countries and hiring teams of equity researchers - Arqaam Capital in Beirut and EFG-Hermes in Jeddah, for instance. Meanwhile, Rasmala Investment Bank - which entered a joint-venture with RBS this year - has been building its research capabilities throughout the year, while the likes of HSBC, Morgan Stanley, Deutsche Bank and Shuaa Capital have all hired in this area.
"A lot of international firms are building research capabilities on the ground in the Gulf, while local banks are realising the importance of good equity researchers as they prepare for a swell in IPOs, particularly in places like Saudi," said Matthew Lewis, director of Boyden Middle East.
And 2010 has been a bad year for....
Corporate banking
At the beginning of 2010, the talk was all about how local banks hadn't cut enough during 2009 and redundancies were inevitable.
It's easy to see why - impairments on bad loans continued to weigh heavily on profits, which made banks more cautious in extending finance, while concerns over exposure to Dubai World and slumping real estates merely exacerbated this.
Instead, they simply stopped hiring. The steady streams of corporate banking recruitment coming out of local banks have long been a mainstay in the recruitment calendar. Unfortunately, this year the well has run dry.
One of the few banks to break out headcount is Mashreq - and it's hired just 13 trainees this year. Banking analysts confirm that few banks have increased recruitment in 2010.
Brokerages in Dubai
The plight of Dubai's brokerages has been ongoing - stock trading volumes have been slumping for some time now, but in August they reached a four-year low.
Brokerages, working under very small profit margins from commissions, cannot handle a sustained period of low activity and many have either pared back staff numbers or closed entirely this year.
Shuaa Capital estimated that there could be just 55 brokerages operating in Dubai by year-end; a figure which has proved overly-pessimistic, but reflective of just how quickly brokerages have been closing their shutters.
In October, Mac Capital became the 13th brokerage closure in the UAE this year, at the cost of 25 jobs.
Bonuses
Punitive bonus rules coming into play from the EU are likely to extend to the Middle East operations of international investment banks, meaning the region is no longer a sanctuary in this regard.
Unfortunately, it's not only this that will mean more diminutive pay packets. To September, the fees paid to investment banks for M&A, DCM and ECM activity in the Middle East totalled $397m, according to figures from Thomson Reuters.
While this figure is up on last year, it's still down on 2007-08, and the muted appetite to recruit in these areas is reflective of this. The more pessimistic recruiters were expecting bankers to be paid nothing this year, while Robert Half's 2011 salary survey suggest bonuses could amount to just 25% of base pay.
