Investment bankers are moving to wealth management, private bankers are moving to private equity
Investment bankers in the Middle East are facing job cuts and, with a lack of new roles in the sector, they should be considering their options. One of these options is a switch across to wealth management - something people are doing with increasing frequency.
Meanwhile, top private bankers - who have no shortage of opportunties in their space - are being lured across to private equity firms.
Investment banking fees are looking particularly arid in 2011, and most international firms have been retracting from the region.
What's more, Shuaa Capital, which has encountered its fair share of problems in recent years, has unveiled plans to re-launch its investment bank as a platform for wealthy clients it can co-invest with.
As we've pointed to previously, the likes of J.P. Morgan and UBS have been hiring for their wealth management arms in the Middle East as they attempt to combine their offerings with investment banking services. The latter hired Albert Momdjian to head its ultra-high-net-worth (UHNW) business in August.
Similarly, Barclays Wealth last month recruited Henry Hall as a managing director in its UHNW team. He was last working at Merrill Lynch as an MD, heading up its emerging markets equities team.
In wealth management, it's necessary to combine technical know-how with close connections to key people in the region, and headhunters expect the more savvy investment bankers to switch sectors.
"I'm anticipating more senior investment bankers taking roles in the ultra-high-net-worth divisions of wealth managers, as international companies reduce their balance sheet risk and focus on winning more fee-related business," says Bill Allum, managing director of headhunters Execuzen. "It remains a highly-competitive market, however, and it remains to be seen whether this strategy will be successful."
It's also clear that wealth management is not a panacea to the current job insecurity in investment banking. Recently, Swiss bank EFG Interntional said it was closing its branches in Abu Dhabi and Dubai ahead of a possible IPO.
Private banking to private equity
Shuaa's move to re-launch its investment bank aims to capitalise on UHNW's appetite for direct investment and there are signs that other private equity firms are tapping into this. We're told that Abraaj Capital has also been hiring private bankers in an attempt to leverage their contacts with wealthy individuals and family offices in the Gulf.
This comes amid a sustained period of low deal activity within the Gulf private equity sector.
"Big private equity firms want to hire senior private bankers to focus on capital raising and investment from wealth entrepreneurs and families in the Middle East," says Susie Hingston, director at Dubai-based headhunters Loxley Partners.
"One thing is clear in the current environment - UHNW individuals in the region have developed more of an appetite for direct investment, rather than putting their money in a fund or portfolio and paying a fee to a wealth manager," says Allum. "It makes sense, therefore, for private equity firms to recruit wealth managers."
