Expat bankers in hardship destinations left in limbo

Ten years ago, a move to Saudi Arabia would have been viewed as a no-brainer for experienced investment bankers in the twilight of their career – the money was good (and tax free), the work was easy and the job secure. It may have been something of a hardship posting, but life in the expat compounds was at least safe and fostered a sense of community.

Now, though, an aggressive campaign by the government to increase the number of Saudi nationals in work – known as Nitaqat – to tackle the growing problem of unemployment in the kingdom, is forcing many bankers out of work. This localisation programme is not just hitting low-skilled employees – although 92,000 Indian workers have been issued exit certificates – financial professionals are also being replaced by Saudi nationals.

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Banking, particularly commercial banking, in Saudi has been predominantly staffed by locals when compared with the expat-dominated financial sector in other Middle Eastern financial centres like the UAE and Qatar. Now, though, there’s a push to increase the number of locals in the banking sector by 95%. Expat bankers are now being ousted out of their current positions, and facing tough decisions on whether to stick around.

A gravitation to the UAE

“Expats being left in limbo has become more frequent given the Saudization process, particularly for those at levels within an organization that do not have the power to look after their own interests when their employer cannot or does not,” said Manuel D. Ron, global head of co-development and investment banking at Integration Capital & Trade (ICT), an international firm that focuses on Saudi Arabia. “I view this as one of the risks that expats should be aware of before moving to any emerging market.”

It’s not simply a case of being fired; in many cases expat bankers are given a grace period of around three months to secure another job whilst being paid by their current employer. The problem is, fewer banks in the kingdom want to hire foreign workers.

“There is an ever increasing talent pool of educated and motivated young Saudis,” said Ron. “There is a strong preference among Saudis for white-collar professional jobs, particularly those with a level of prestige and stability.”

Saudi’s loss, for the most part, is becoming the UAE’s gain, despite the fact that the country’s own localisation efforts are pushing senior expats out of their jobs and security clearance for expat employment visas is being delayed.

Difficult to go back West

One former recruitment manager, who focused on international recruitment for an investment bank in Saudi, believes he had no choice but to gravitate towards Dubai: “The other choice would have been London, but it’s difficult to find work when your last job was in Saudi. Even here, I’ve had to start my own consultancy, but at least my experience is valued.”

A private equity professional with an MBA from London Business School who has worked in Saudi for seven years also moved to Abu Dhabi this year after being told his job was in jeopardy: “My family are settled in the region,” he said. “The prospect of a move to London or New York is too daunting currently.”

Ron believes that forcing expats out of the investment banking sector is a mistake, as it also pushes out expertise that can’t yet be found locally: “Investment banking in Saudi is in its nascent stage so there has not been enough time to develop the skills and experiences for many Saudis,” he said. “Given the nature of the skills needed, while education is important at a base level, it is only through certain experiences, both successful and failed, that a top quality investment banker can emerge.”