Gulf banking sector: Resilient, creative, strategic savvy-ness

The one constant in the Gulf region banking sector over the last 6 years has been change.

Post the 2008 global, and subsequently local economic downturn we saw many of the financial institutions in the region slowing down their expansion plans, cooling off to re-assess strategy moving forwards.

This was indeed a busy period for consultancies who were providing tailored advice on which areas to streamline, what core competencies to focus on, and how to maximise competitive advantage. The net result of this period of reflection was that in the short to mid term, hiring activity came down significantly with the exception of critical or replacement hires or hiring to meet government-led localisation targets.

This of course went hand in hand with rather unfortunate right-sizing, something we witnessed with both local and international brands.

Nevertheless during this period of uncertainty Huxley Associates continued to invest in our risk, compliance and corporate governance practise - not a surprise given that the region's banks were keen to avoid a repetition of the excessive risk taking days of previous.

Demand surged in this area, and continues to do so, particularly for professionals with the right regulatory experience and Gulf region experience and know how. With the region now having fully bounced back, in particular from a sentiment, quantative easing and intent perspective, several banks are posting record profits. The table below illustrates some examples from across the GCC:

 
* Several other banks have not been mentioned in this table; this is for illustrative purposes only.

How was this achieved? 4 things stand out.

Taking the risk out of risky

Stringent risk, compliance and corporate governance practises implemented by banks, and monitored by the regulators.

We have already touched on this point above, however it is worth adding that 2013 was a record year for Huxley Associates in terms of number of Chief Risk Officers, other senior Risk posts and Risk teams placed in the Gulf region. Never before have banks invested so much in this function.

Corporate banking - Clever segmentation

Credit for this remarkable recovery must be attributed to the region's leadership, the regulatory bodies and the overall prudent and cautious approach taken by financial institutions.

However, the main catalysts of growth that have helped the banks nurse themselves to full fitness, include some fairly pioneering game changing initiatives.

We saw a huge upward trajectory in demand for hiring within front line corporate, commercial and wholesale banking - a strong indication that the bank's were looking to increase revenue streams and lending to institutions whilst retail lending to individuals had taken a temporary set back given the socio-economic conditions of the day.

We saw ever more creative, clever and sophisticated segmentation of traditional target audiences. For example, instead of Relationship Managers (RMs) focusing on just SMEs, multinationals and government entities - we saw this area being further sub-segmented into niches such as "mid-market emerging corporates" for example.

This was initiated by some of the multinational brands such as Standard Chartered Bank and HSBC, however, also executed successfully by locals banks such as National Bank of Fujairah (NBF)) and Commercial Bank of Dubai (CBD).

Essentially, the genius in this particular example was that RMs would seek to identify and court SMEs who whilst currently may have revenues below Dh100 million, given their growth rates, strategy and management in place were widely tipped to grow into a Dh500 million business in the coming years. 

So by partnering and building trusted relationships with companies at the embryonic stages, they would be part of the journey and be retained as the bankers of choice for the company once they had elevated themselves from SME to Emerging corporate status.

This tact has subsequently been employed by other banks too - and has resulted in a sharp demand for frontline RMs with the very same transferable end-client relationships mentioned.

As it stands right now with economies having vastly improved, delinquencies down to record lows, balance sheet at all-time highs, Abu Dhabi, Dubai, Qatar and Saudi Arabia are leading the way in terms of investing internally and externally positively impacting headcount, profits, market and geographic presence.

With the banks now lending buoyantly across retail and corporate and wholesale banking, individuals as well as SMEs, multinationals and government entities all have access to funds not available previously.

This has contributed to these organisations in turn being able to grow at a faster pace backed with the required strategic direction and investment.

Technology – Investment to scale up and keep with the times

Another major area of investment for organisations across the board has been technology. Many banks who once upon a time had technology infrastructure fit for purpose, have identified that their current set is no longer scalable, robust or current-technology relevant in the future.

Today's issues include cyber security, fraud prevention and anti-money laundering initiatives. These issues are far more pronounced now, then in previous years. This has fuelled banks to implement major transformation / upgrade projects across operations and technology.

This has been further exacerbated by the geographical diversification of several Gulf based banks into foreign markets in Europe, the Far East and beyond.

For example Abu Dhabi Islamic Bank have opened entities in Iraq and the UK, National Bank of Abu Dhabi are now in the USA and Sudan, Qatar National Bank are in Syria, United Bank Ltd are now in Tanzania and Libya and so on.

Even organisations that continue to have a single country presence are experiencing the growing pains of moving from small to mid size or mid size to large - again, reason enough to invest in the management of this change, culturally as well as from a business and logistics and technological perspective.

Executive Appointments – The right talent from top down

Post 2013 it has been quite remarkable the number of C-level placements the region has seen, again a major indication of top down action beginning to materialise in the industry.

We have seen appointments including the new CEO for Emirates NBD, with Shane Nelson moving over from Standard Chartered; Alex Thursby, CEO for NBAD (National Bank of Abu Dhabi) moving over from ANZ, Peter England, the new CEO for Rak Bank, Mohsin Al-Nathani the new CEO for Standard Chartered Bank and so on.
 
With each appointment, we are seeing fresh strategies being implemented and of course this has a bearing on hiring patterns.

With Dubai having won the Expo 2020 bid, Qatar the Fifa Football World Cup 2022, and Saudi potentially opening up to foreign capital investment, and several local and international banks expanding in Iraq and Kurdistan, the regional outlook remains refreshingly optimistic in the long-term from an infrastructure and development investment perspective.

With the political and economic troubles in countries such as Syria, Egypt, Lebanon etc., the major Gulf countries have indirectly benefited with a huge influx of capital and business families and professionals migrating here given the safe-haven status of the GCC.

Add to this the fact that this region is now a lifestyle and tourism destination of choice for many expats tired of the recession soaked pessimism of their home countries in Europe and beyond, this part of the world is now a magnet for the best global talent - another vital ingredient for strong, sustainable growth.

Banking and Financial Services: Exciting times ahead

Being deeply entrenched in our local markets, and leveraging of our global presence across continents, Huxley Associates now have highly rated and recognised desk focusing on C-Level, Executive Board and Profit Centre Head roles.

This is in addition to our very well established Risk, Compliance and Corporate Governance division, Technology & Operations division and Corporate / Wholesale banking division.

Further, given the project based nature of our clients implementations we have for some time now begun to successfully offer solutions to manage Headcount and Quota Constraints, Expertise Injection and Project Delivery assistance across industries for Contract, Visa & Payroll Services, Outsource, Project Based, Interim Hires and End to End Managed Agency.

Our Gulf based headcount for Huxley Associates is now at a record high and we will continue to add to our team of professionals here in the region directly proportionate to the increasing reliance our partner banks are entrusting us with.

Suffice to say, exciting times ahead for the banking and finance industry as a whole.

Hasnain Qazi is Gulf Region Head at Huxley Associates, UAE
 

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