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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.”
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.”
Have you ever met an Investment Banker who said that the business was not good or that he hadn't got a huge deal pipeline and "big expansion plans"? I haven't. Banks always overhire only to overfire a little bit later. Today, Dubai is full of bankers lured to the region by better employment prospects who can't find a -paid well enough- job. Also, with rents on par with Manhattan (not with London yet), it should make people think twice about joining the race.
JF 02 Jul 2008
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