Worried US bankers hunt work in UAE


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Western finance professionals who face an uncertain future at home are searching for work in the UAE in rising numbers. The number of Americans using Google to search for finance jobs in Dubai has more than doubled in the last year, as a wave of redundancies, restructuring and uncertainty rocks the US financial sector. More than 20,000 US-based finance professionals lost their jobs in the past year, according to a recent study by the US payroll company ADP. In June, a Bloomberg survey predicted that the global financial industry will cut 175,000 jobs in the coming 12 months.

Meanwhile, workers at the Dubai International Financial Services Centre (DIFC) are busy building a 35,000-space car park - the world's largest - to meet rapid growth in the Gulf's most successful finance zone. An acute shortage of financial and technical talent is routinely cited as a bottleneck to growth in the GCC, pushing companies to offer bigger and better benefits to lure foreign professionals.

But a look at recent trends in Google searches, made possible by the company's newly released Google Insights service, suggests the chaos in Western markets is lending a helping hand. At the beginning of last year, Google users were as likely to search for finance jobs in Dubai as they were for the same jobs in the global financial centre of New York. When New Century Financial, the largest US subprime mortgage lender filed for bankruptcy by the end of April, job hunters were almost one third more likely to search in Dubai.

By the end of July this year, the gap had widened to more than two to one. US job hunters have also shown growing interest in finance jobs in Bahrain, Qatar and Abu Dhabi. Their logic is not surprising. Work on Wall Street will remain difficult to come by for the foreseeable future. At least 33,000 finance professionals in New York City are expected to lose their jobs by the middle of next year, according to figures from the city's Independent Budget Office.

With the crisis now spread beyond the shores of the US, major job losses are also being seen in London, which vies with New York as the centre of global finance. The Confederation of British Industries expects at least 10,000 financial sector job losses this year. And much like their US colleagues, British bankers are showing an increasing interest in the tax-free, perk-heavy lifestyle the UAE can offer to their kind. In the UK, Google searches for finance jobs in Dubai have more than doubled in the past three months alone.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”