DUBAI: Big US and European banks are cutting investment banking jobs in the Middle East as the promise of emerging markets is overshadowed by a need to slash costs and a dearth of deal activity.
Institutions including Deutsche Bank, Credit Suisse and Japan’s Nomura Holdings have all cut jobs in their investment banking teams for the region in recent weeks. And where previous cuts have seen junior bankers shown the door, the recent round has included directors and, in Nomura’s case, the head of its investment banking operations in Dubai.
Faced with less business in the region, as well as the eurozone debt crisis and stiffer regulation at home, global banks’ patience threshold is far below what it was in the boom years. One exception to the gloom in the Gulf is Qatar. The state has spent billions of dollars this year on stakes in high-profile businesses such as miner Xstrata Plc, Royal Dutch Shell and French media group Lagardere.
Middle East investment banking fees were $234.8m in the first half of 2012, up 5 percent from a year ago but far below the nearly $1bn in fees earned by banks during the boom years of 2005 and 2006, Thomson Reuters data shows.
Banks have relocated some of their top bankers home or to regions where prospects are better. Other bankers are pulling the plug themselves, in order to set up shop on their own or move to more attractive financial centres.
Rothschild moved its Middle East investment banking head Herve Sawko to Paris in May, replacing him with Chris Hawley, a mergers and acquisitions banker. Paul Reynolds, managing director for debt and equity advisory services and a key figure during Dubai’s 2009 debt restructuring, is also leaving the region for the boutique bank’s northern Europe operations.
Standard Chartered’s regional head of client coverage, David Law, relocated to Johannesburg as regional head of corporate finance in Africa. In March, HSBC named Andrew Dell as the bank’s CEO for South Africa, in addition to his role as head of debt capital markets for central and eastern Europe, the Middle East and Africa. Dell relocated to Johannesburg from Dubai as part of the change.
Reuters
