Banking industry braced for ugly summer

The world's big banks have moved from hiring to firing. But amid the doom and gloom facing the financial sector in Europe, Dubai offers a glimmer of hope.

Last year, HSBC said it would cut 30,000 staff by 2013. Andy Rain / EPA

As the euro-zone crisis deepens, the world's big banks have over the past year moved from hiring to firing.

The City of London has borne the brunt of these cutbacks and the number of jobs there this year is forecast to fall to 255,000 - a 16-year low - from a peak of 354,000 in 2007.

But amid the doom and gloom facing the financial sector in Europe, Dubai offers a glimmer of hope. Hiring in the emirate is on the rise in investment banking and wealth management.

"People are being careful, but activity is picking up," says Jennifer Campori, the managing director for the Middle East and Europe at the recruitment firm Charterhouse Partnership in Dubai.

But in London, there is little sight of an end to the misery. "It's going to be an ugly summer," says Stéphane Rambosson, the managing partner of Veni Partners another recruitment firm, which has offices in London and Paris.

So what does the future hold? The National asked Ms Campori and Mr Rambosson how the next 12 months were likely to play out in Dubai and London.

q Let's start with Dubai. How much activity are you seeing?

a Ms Campori: There's pockets. January was slow, but the next four months we have had decent jobs come in. There's growth in private wealth and banking. They're expanding, and banks are looking at wealth management and investment. Banks are particularly focused on wealth management after the Arab Spring as money has been drawn to Dubai from elsewhere in the industry and the region. We have seen Royal Bank of Canada and Coutts announcing hiring plans. Other than international banks, it is Abu Dhabi banks. On the retail side it's more limited. But its definitely better than Europe. I see banking growth in Qatar higher than the UAE.

What are the drivers in Qatar?

Ms Campori: You are seeing all the banks recruiting, whether in compliance, relationship management, investment management or other roles. It's local banks in Qatar. They are trying to put themselves on the map and improve the infrastructure ahead of the country's hosting of the [Fifa] World Cup in [2022]. We have been in Qatar for four years or so and I have never seen so many roles in investment and retail as there are now.

What are the prospects for Dubai in the remainder of the year?

Ms Campori: I definitely think there will be an 8 to 12 per cent increase in the third quarter [on hiring]. The plans are there and the banks are ready to go, but they are waiting for the Greek situation to resolve itself. There is also local issues as some banks reorganise their internal business before recruiting.

Do you see opportunities here for out-of-work bankers in London and elsewhere?

Ms Campori: We always get a lot of candidates from elsewhere. However, there's a lot more requirements for Arabic speakers and a greater push for Emiratisation among UAE banks, and that's increasing. International banks also have a preference for Arabic speakers. There are still opportunities for international candidates but it's limited. For example, if you're Arabic, educated and trained abroad and working in New York you'd do well here.

Are banks offering better pay?

Ms Campori: For the first time we are seeing salary increases. Three or four years ago there was a lot more competition for positions. After cutbacks at some of the banks, there are now less people available within the region for roles. That means banks are having to offer better terms. Similarly, in Qatar the pay is increasing and there's more willingness to offer attractive packages like help with school fees as places here are limited.

Have the cutbacks stopped?

Ms Campori: The streamlining has already happened. There's definitely more hiring than firing. But it's not the boom we saw before the global financial crisis [in 2008]. A client I spoke to the other day, for example, said he wants to expand but is waiting on Europe as a lot of its business is based there. The European crisis is affecting everyone, even local banks as, for instance, there may be less European tourists visiting Dubai.

Switching to London, are the banks hiring more than firing?

Mr Rambosson: The net flow is definitely negative. A lot of the [recruiting] firms are not very active. It's pretty rare to be doing anything. I think there's clearly a pendulum in all of this situation. The start of last year felt good, and the first quarter of this year felt good. But it was make-believe, as everyone wanted things to be better, but frankly a lot of issues in the euro zone were not being resolved. Now things have gone the other way and people are acting like it's the end of the world. It's going to be an ugly summer. But it may be that in the second half of the year things get better, as it's often mini cycles.

Is the doom and gloom all down to the euro-zone crisis?

Mr Rambosson: It's having a big impact. As there's less volumes in the financial markets, a lot of companies are pretty much shut, so the income they're getting is much smaller. As a result, they're generally continuing to cut rather than hire.

How does it compare to last year?

Mr Rambosson: This time last year felt like a very strong market. Financial institutions who had cut a lot of people were rebuilding and hiring, and it felt really good. Financial institutions were delivering pretty strong results, but that changed quite dramatically after the summer, and the hiring turned to [firing]. The first quarter of this year was better as activity was up, but in the last few weeks it has turned negative across Europe with the Greece situation, the French elections and the euro-zone crisis creating a lot of uncertainty. That has had an impact on the market.

Are there any bright spots?

Mr Rambosson: What we are seeing is activity at the very senior level. We are seeing replacements so either people who have decided to leave the industry and move on or those who have decided to set up their own boutique shops. There's also some upgrading activity, so some financial institutions have decided to use the restructuring environment to get better people in at a senior level. We have also had clients looking to build up new areas, and its mostly in coverage of banking at a European or UK level. We are lucky as we are a tailor-made recruitment firm focused on the senior level, but anyone at the junior to mid-level business will be suffering.

Who are they hiring?

Mr Rambosson: Senior management who can make an impact on the business. People who know how to hire, generate business and increase market share at a time when the overall size of the sector is being reduced are still sought after.

Is the downturn a short-term blip or longer-term trend in which banking centres such as London will be eclipsed by Dubai and other emerging markets?

Mr Rambosson: There's still a huge amount of talent here, and Europe is still a huge market and won't disappear. I'm still positive in the long term.

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