GUEST COMMENT: Gulf-based bankers will not settle for a third year of mediocre bonuses
During the course of the next two weeks, investment banks in the Middle East will announce this year's bonus payments, which have been eagerly anticipated for some time now.
Bankers around the world tremble with anticipation of their impending bonuses - if you look closely enough you may even catch a glimpse of dollar signs in their eyes! But in the GCC specifically, this year's bonus round is particularly important.
Expert opinion suggests that the worst of the financial crisis is behind us. The GCC took more time to feel the impact of the global crisis, but recovery has been slow over the past two years.
The result is that, despite lower bonus payments in 2008 and 2009, most firms in the region have managed to hold on to their talent simply because the crisis was so widespread and new job opportunities relatively sparse.
The question is whether this will still work for them in 2011. The investment banking jobs market in the Gulf is still far from buoyant, but there's been a marked improvement over the last 12 months. If bonuses are low again this year, there's a good chance that talent will begin looking for opportunities elsewhere in the GCC jobs market.
But there's the issue of where financial services job opportunities are arising. Massive infrastructure drives in Qatar and Saudi Arabia have meant that recruitment has shifted away from the UAE and Bahrain and towards these countries. The question of whether talented bankers will move to these regions remains unanswered.
There's also something of a split between the remuneration practices at international institutions and those at regional banks.
In the wake of the financial crisis, and regulatory pressure on banker bonuses in Western markets, many international banks have placed a greater emphasis on base pay over variable remuneration. The result is that people working in these firms have competitive packages regardless of their individual performance.
Many GCC-based regional firms have not changed their compensation structure to match this and can ill afford to pay poor bonuses as they will risk losing talent to international firms offering higher guaranteed bases. It will be interesting to see how this follows through and whether regional firms revise their compensation plans to compete.
Bonus season is always watched with great anticipation by bankers, recruiters and regulators alike, but this year promises to be particularly interesting.
Jonathan Gould is manager, financial services and finance division at Morgan McKinley in the Middle East
