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Have banks over-hired in the Middle East?
1 July 2008
It’s no secret that global investment banks have been bolstering their Middle Eastern teams – often transferring them across from western locations – but now it seems some may have over-egged the pudding and are quietly laying people off.
According to Financial News, an anonymous executive from a bulge-bracket bank says the teams may have expanded too aggressively in anticipation of increased commercial activity, without thinking about business models, and “rationalisation of headcount is happening.”
The executive says that the problem is that although the opportunities in the region are huge, they might not happen for two or three years and “banks have to run their business in the meantime.”
Last month, Kaveh Ertefai, a UBS investment banker covering the Middle East, was laid off as a result of global culling at the bank – despite the fact that the bank had shifted six senior bankers to Dubai last week. And we reported on rumours of Credit Suisse and HSBC getting rid of senior bankers in February.
Other banks said to be scaling back include Deutsche Bank and Morgan Stanley, though the latter tells us it’s increased headcount in the Middle East since February and has big expansion plans in the region going forward.
Metin Mitchell, managing director of headhunters Korn/Ferry, says it’s more a matter of quality over quantity: “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.”
Another headhunter agrees that some expats have had it too good over the last few years: “Some very mediocre people, especially from the UK, have been on some ridiculous packages, which means that now there’s an increasing focus on the region they could be in a vulnerable position. It also sets the bar high in terms of compensation, which makes salary negotiations very difficult.”
Be careful with headhunters in the Gulf and in Dubai in particular, they, exactly like the investment bankers, are a huge excess of contigent in the region. They moved in lots seduced by the tax-free environment and suddenly became the most annoying specimen of the Gulf calling you everyday to try to get any business, fees that once topped 35% nowadays can be easily negotiated at the 10% range.
The other big danger is that they are inventing mandates just to attract your CV and then will be brokering your CV with all the firms without your knowledge or consent.
banker 05 Oct 2008
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