Saudi Arabia used to be a hardship posting for foreign bankers, with local institutions luring them only with the promise of lucrative expat packages. Now, banks in the kingdom are driving down salaries by as much as 50 percent for expats, and locking them out of the junior and mid-ranks entirely.
Saudi remains a hot spot for banking and finance recruitment. Most local institutions continue to build their ranks after a positive 2012, according to recruiters, while international firms are also fighting it out for senior talent.
Goldman Sachs, for instance, hired Omar Mohammady from Barclays to lead its investment banking business in Saudi Arabia. Last year, the bank lost its Saudi chief executive and head of investment banking, Rayan Fayez, to J.P. Morgan, which also poached Ahmed Saeed from Nomura in October. VTB Capital has said it may open an equities business in the kingdom, while Morgan Stanley and Credit Suisse have transferred bankers from Dubai to Riyadh.
However, since the launch 18 months ago of Nitaaqat, a Saudization programme designed to increase the number of locals in the workforce, banks have become reluctant to recruit expats. Under the programme, private firms that employ more than 50 percent expats are required to pay SAR2,400 ($640) a year for each foreign employee.
“Saudi Arabia is a very buoyant market, but outside of the senior ranks there’s very little recruitment among the international players,” said Matt Wheldon, director banking and finance at recruiters Gulf Connexions. “There’s a big focus on hiring local candidates among the regional institutions, with around 90% of the vacancies within the large regional banks closed to expats.”
Banks in the kingdom are only hiring expats for senior or specialist roles, such as investment banking, said Peter Jones, director of Middle East-focused recruiters MRK Consulting. Expats who are economists and equity research analysts can also get jobs, said Wheldon.
In the boom years, Saudi banks would have dug deep to attract senior expat bankers. They’re now driving down pay packets by as much as 50 percent, says Jones.
“Banks in Saudi understand that there is a lack of opportunities for expats from London, Hong Kong or Singapore elsewhere in the world and are taking advantage of this with lower salaries,” Jones said. Some bankers still view Saudi as an attractive place to work. “The deal flow is good, and a stint in the kingdom for a few years is positive for their CV,” said Jones.