The party had to end sometime; wealth management recruitment in the Middle East has switched from frenzy to a world of the haves and have nots. While some firms are talking up aggressive expansions, others are calling it quits and leaving the region entirely.
Setting up the infrastructure, and recruiting and retaining the best private bankers on the ground, is an expensive business and some firms are simply regressing back to an offshore model. Earlier this year, Swiss private banks Vontobel and Pictet decided to start running their business from Geneva, while HSBC has decided to curtail its regional wealth management business even further by pulling out of Bahrain, Jordan and Lebanon.
The investment banks, boutiques, hedge funds and fund managers who have been hiring UBS bankers
The emerging market still busting to hire Americans and Europeans
“Private banks used to dealing with wealthy individuals from the Middle East have on an offshore basis have found the onshore model a difficult one to crack,” said Magdy El Zein, managing director of headhunters Boyden Middle East. “It’s difficult to justify absorbing the overheads of having a large regional team in place when the business isn’t there.”
And yet wealth in the region continues to increase. High net worth individuals in the Middle East and Africa have seen their wealth increase by 9.1% to $4.8trillion in 2012, according to a June report by Boston Consulting Group.
Some banks remains keen to get a slice of the action. Credit Suisse, which recently acquired Morgan Stanley’s wealth management business in the region, is planning an aggressive expansion across the UAE, Qatar and Saudi Arabia, while Coutts and Barclays continue to recruit, according to headhunters.
However, JPMorgan’s recruitment of Antoine Massoud as a senior banker within its Middle Eastern team in Geneva to focus on ultra-high-net-worth individuals highlights why many banks have struggled to dent the local market – the super-wealthy enjoy the status symbol of having an international private banker.
One wealth management consultant, who declined to be named, told us that London and Switzerland are the key hubs for the Middle Eastern ultra-wealthy, who enjoy flying into these cities to discuss their business.
“The result is that onshore wealth managers in the region have struggled to attract business from family offices and ultra-high-net-worth individuals. Instead, they’ve focused on high net worth or even mass affluent market, which requires even more investment in personnel.”
The result, says El Zein, is that private banks on the ground are changing the focus of the people they want to hire: “The vast majority of people being hired now are Arabic-speaking locals, who have the connections locally. Then there are around 10-15% who are English or French, depending on the market the bank wants to target.”