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BAnking briefing


companies. Senior executives were transferred and equities teams expanded in anticipation of a burst of activity and revenue. This failed to materialise. Over recent years the value of stocks traded on Gulf bourses has nose-dived. Turnover in the GCC dropped to $296 billion last year compared with a high in 2006 of $1.6 trillion, according to Markaz, a Kuwait- based investment bank. Fees earned by investment banks in the Middle East fell 42 per cent to $320 million in the first nine months of the year from $551.1 million during the same period in 2010, according to New York-based research firm Freeman & Co. Total fees in 2011 are 71 per cent lower than in the first nine months of 2008, when fees peaked at $1.1 billion. Shane Phillips, head of the MENA


practice at headhunter Stanton Chase, said: “Trading volumes and investments in the Gulf are all down, so the size of offices in the region will be contracting. This could also ricochet into other sectors. “There are banks in the region that


are suffering because their main revenue stream is equity markets. The only way banks can meet their financial obligations is to decrease costs. Of a bank’s profit and loss, 60 per cent to 80 per cent is made up of salaries,” Phillips added. It’s easy to get carried away though,


he says. Cut backs are big news, but there is hiring taking place in investment banking, especially within risk management, compliance and operations. Also, there’s buoyant demand for


staff in private banking, private equity, personal banking and other stable growth areas. “Saudi Arabia is seeing a huge boom


“There are banks in The region ThaT are suffering because Their main revenue sTream is equiTy markeTs. The only way banks can meeT Their financial obligaTions is To decrease cosTs. of a bank’s profiT and loss, 60 per cenT To 80 per cenT is made up of salaries.”


in personal finance, car loans, credit cards, and home loans thanks to a change in mortgage legislation. There is an increasing number of private equity firms investing in these personal finance companies and as that gains momentum they will naturally be increasing headcount,” said Phillips. Analysts argue that there were too


many bankers in the region at the height of the boom and the current retraction is also too aggressive. High government spending and oil output is likely next year, which bodes well for economies in the Middle East and North Africa. The World Bank raised its 2011 growth estimate for the region to 4.1 per cent from 3.6 per cent in September. Cecile Hofer, co-managing partner of financial headhunter Taylor Hofer, added: “Historically, banks have always hired very quickly and let people go very quickly. This behaviour at the moment is nothing new.”she added. Pressure to make savings at home has left international players with little


closing time


• investment bank nomura recently disbanded its Dubai-based equity research team of several people as a result of low trading volumes, although it said some leading regional companies will continue to be covered by London-based analysts. • France’s Crédit agricole closed its M&A unit in Dubai this year, aiming to manage deals from elsewhere. It came after news that investment banking fees in the Middle East declined 35 per cent to $316.6 million in the third quarter compared with the same period a year earlier, data from Reuters found. • Zurich-based EFg international said it is closing its offices in Dubai and Abu Dhabi as it conducted a global review of its business. • HsBC, Europe’s biggest bank, said it will stop offering brokerage services to retail investors in the UAE and focus on institutional clients. The bank will also close its consumer operations in Kuwait as part of a strategic review. • Meanwhile, four investment bankers from Crédit agricole’s MENA operation • Kanhaiya Rathi, Kawtar Benkhraba, Pravin Chelluri and Rami Barazi – have been hired by UBs in Dubai. They will be working for the Swiss bank’s corporate advisory group, reporting to Albert Momdjian, according to reports on Bloomberg. • Credit suisse dissolved its Middle East equities research team.


choice but to step back from the region. But it’s hard to imagine that local investors and businesses will welcome back the same banks with open arms when they decide to return.


gUlF BUsinEss / 31


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