eFinancialCareers

Think Dubai is immune to sub-prime problems and layoffs? Think again…

Outwardly, banks may be in expansion mode in the GCC, but less publicly they’re said to be quietly cutting costs at the senior end.

Sources tell us that Mohamed Kamal Metwally, managing director, investment banking, at HSBC Bank Middle East, and David Ludlow, head of investment banking at Citigroup in the Middle East, have both been laid off, though this has yet to be confirmed by the banks.

Metin Mitchell, managing director, Middle East and North Africa, at headhunter Korn/Ferry International, says senior-level layoffs are down to expectations not matching reality: “Banks over-hired and over-paid for senior investment bankers with ‘Middle East’ experience. They were taken on under the assumption they were going to bring in major deals, and it hasn’t happened,” he says.

Mitchell says that institutions in the Middle East are waking up to the fact that they’re not making enough money, and senior bankers don’t come cheap: “These people are being paid $2-3m a year,” he adds.

Last year, investment banking revenues in the EMEA region were $33.1bn according to figures from Dealogic, up from $30.4bn in 2006. However, some local banks are feeling the sub-prime pinch – the Arab Banking Corporation recently announced that its 2007 profits slumped 38% following a $230m sub-prime-related write-down.

What’s more, Emmanuel Volland, director of financial services in Standard and Poor’s, says he believes GCC banks are hiding sub-prime losses: "Transparency and quality of disclosures are still a big problem with some GCC banks and to that extent the information on the exact nature of exposure is limited. However, a few banks have recently acknowledged sub-prime related losses and there could be a few still hiding their exposure,” he told Gulf News.

Not all recruiters concur with the notion that Midde Eastern hiring is turning to firing, however. Alex Cormack, director, head of Middle East for recruiters Sheffield Haworth, says he has heard of senior people being laid off, but banks are generally ramping up recruitment.

“Most of the banks I speak to are very bullish about hiring investment bankers,” he says.

Indeed, Shuaa Capital recorded record results for the nine months leading to 31 December 2007. The firm posted a net profit increase of 120.9%, to $93m, which it said was driven by asset management, investment banking and private equity divisions.