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Pay pain for banks in the GCC
7 May 2008
Pay in the Middle East is spiralling. It now makes up almost 60% of banks’ operating costs.
A survey by consultancy Hewitt Associates suggests salaries in Oman and Qatar lead the way when it comes to eating into banks’ profits. But pay across the Middle East banking sector is becoming a problem – particularly when you consider that the average US bank aims to keep compensation costs below 50% of revenues.
Pay-hungry expats may be to blame. Craig Martin, senior consultant covering Qatar and Kuwait in Hudson’s international and emerging markets division, says packages are escalating in the region: “Expats will go to Dubai for the lifestyle, but need a money motivator in other countries, particularly at the senior end.”
Jonathan Duckfield, executive director of the Options Group in Dubai, says growing sophistication and demand for complex products has led to greater demand for expat expertise, which has pushed salaries higher.
“Three to four years ago we saw 80% region to region recruitment, 20% external. Now it’s the other way round,” says Duckfield. He adds that international banks are still hiring, and that regional and local institutions are willing to pay top US/UK packages for the right people.
Reliance on expats may fall in future. Duckfield says Arab nationals working in major banking centres outside the region are keen to come home, now that “the market here has evolved enough to make use of their talents”.
The Hewitt survey covered 26 banks, both regional and international.
I would rather say, 'Expats will go to Dubai despite the lifestyle and the cost of life if their is a sufficient financial compensation'.
FT 07 May 2008
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