Just a month into the New Year, bad news seems to be flowing in for employees in investment banks. Multinational banks, especially the ones headquartered in Europe, will likely brace for more job cuts, impacting their operations in the UAE. However, the contagion may not spread to local entities, which are likely to see 2012 as a much better year.
“I would expect to see job cuts from most of the multi-national players in the region as there is a definite trend to downsize for any bank, which is headquartered in Europe. London based banks with a presence in the Middle East will continue to question their commitment to fringe geographies such as the UAE and thus I would expect continued downsizing of multinational onshore businesses,” Shane Phillips, MENA Regional Practice Leader, Financial & Professional Services at Stanton Chase told Emirates 24|7.
However, Phillips is optimistic when it comes to the performance of the local and regional banks. “Regional players will continue to push a growth agenda for 2012 as they do not have the same kind of risk exposures that their international counterparts have.
Banks such as National Bank of Fujairah for example are doing fantastically well given the current environment and will continue to expand throughout 2012. I would predict that other relatively unknown players such as Commercial Bank International will continue to surprise people with their expansion this year.
The usual suspects such as Emirates NBD and National Bank of Abu Dhabi will also deliver a punchy performance this year. I think this will be a big year for regional business as we continue to see a de-coupling from the Eurozone and domestic demand continues to take stride.
“In general, I predict the Eurozone to take a nosedive and take everyone and everything with it within arms reach. We can only hope that the Middle East is outside of arms reach. That remains to be seen, but even so I think the banks I mentioned above and others like them will continue to do well,” he added.
Agrees Hasnain Qazi, Middle East Business Manager at Huxley Associates. He believes that 2012 may not be very different from last year and global problems will continue to weigh down on the banks.
“Investment banks have been streamlining their operations in the UAE steadily over 2011 and we expect the trend to continue into 2012. For example, many of the brokerages have been right-sized or closed down altogether. That said, other division within the same banks, such as asset management have seen hiring happening. All in all, 2012 will be a year of consolidation with a lot depending on progress in the US, the Eurozone, and how much the geo-political situation in the MENA region stabilizes,” he said.
Some experts in the industry believe this year may not be tagged great or even a good one but the worst seems to be behind us.
“I think the worst has been and gone for the investment banking and private equity industry in the UAE, and I would back the sector to show real signs of recovery in the second half of 2012. The region is affected to a large extent by the contagion in Europe, but this is more likely to affect lending businesses as interbank liquidity starts to dry up amidst recapitalisation of balance sheets post European debt defaults, ratings downgrades or ‘haircuts’[ (accepting a reduction in debt).
However, the wheels of motion have restarted at some pace across industry the GCC, and when a largely retail investor base takes note of this we can expect the return of confidence, stock market liquidity, IPOS and fundraising opportunities to emerge. We expect a quiet start to the year, but we do expect to see hiring in M&A and Equity Capital Markets within investment banking, new investment focused roles in private equity and a slight resurgence in equity sales and brokerage,” explained Toby Simpson, Managing Director, the Gulf Recruitment Group.
“I believe most banks have cut as far as they can in investment banking without completely pulling out of the UAE. In some cases staff have been moved internally to where they have business in the region; Credit Suisse to Qatar, Nomura to India, Barclays to Africa etc. The bankers are not expecting a great 2012,” Peter Greaves, Executive Vice President at DHR International told this website.
According to a survey by job portal, bayt.com, the banking sector in general seems to be a promising one this year. “[Majority] 62 per cent of UAE employers are planning to hire in 2012. The same survey revealed that the banking and finance is not only the top industry regionally to attract and retain top talent (36 per cent) but also in the UAE (36 per cent) ranking second after oil, gas and petrochemicals (39 per cent),” said Amer Zureikat, VP Sales, Bayt.com.