Investment banks in the Middle East turn to Western expertise over local connections

It used to be that the ticket to getting an investment banking job in the Middle East required close personal relationships with the region's huge sovereign wealth funds (SWF). Not anymore.

Banks are focusing more on technical skills than on relationships as Middle Eastern funds begin to value their connections with an institution rather than a particular individual. “The days of transferring senior bankers to focus solely on developing relationships with Middle East SWFs are largely behind us,” said Barbara Van Meir, managing director of Dubai-based headhunters Vogel & Noor. “Investment banks are focusing on technical skills over relationships, and often looking internationally for these.”

In 2008, investment bankers were being parachuted in with a specific remit to access SWFs. Makram Azar, now head of Barclays’ investment banking operations in the Middle East, was hired by Lehman Brothers as global head of sovereign wealth funds. Morgan Stanley moved Dennis Cornell, Hugo Parson and Hani Ramadan to Dubai to focus solely on SWFs. Only Ramadan remains in the region, now at Waha Capital, while Cornell and Parson moved back to New York and London respectively.

This is not to say that relationships with sovereign wealth funds are not integral for investment banks to succeed in the Middle East. However, it’s more about the institution than the individual, suggests James Wakefield, director of headhunters Cobalt Abu Dhabi.

“Sovereign wealth funds are developing long-term relationships with institutions and accept that senior personnel within the banks will rotate,” he said. “SWFs are conservative institutions that value loyalty, they don’t want to hop between institutions whenever a senior banker leaves.”

The first quarter of 2013 has been the best start to a year for investment banking fees in the Middle East since 2008. Fees increased by nearly 50% on Q1 2012, to reach $143.5m, according to figures from Thomson Reuters. The prospect of a move to the Middle East has become more popular among investment bankers in the Middle East and while the job market is still far from buoyant, hiring is happening.

Arqaam Capital recruited James Goldie from J.P. Morgan in London as senior adviser to its executive office in March, while Barclays, J.P. Morgan, Standard Chartered and QInvest have all been hiring.

Nonetheless, the exits of bankers with close SWF connections can still cause ripples in the market. Khaled Eldabag, a senior investment banker at Goldman Sachs who worked with Abu Dhabi SWF Mubadala on its $2bn stake purchase in Brazil's EBX, resigned this month and Michael Helou, a Barclays banker in the Middle East who worked with Qatar Holdings, is believed to have resigned from the bank.