Dubai has positioned itself as the natural home for frazzled bankers as the region’s fundamentals seem to dictate growth amid global gloom, but the rush to the Gulf could finally bring down the mega-salaries commanded here.
Bankers are expressing relief that they are in Dubai or elsewhere in the Gulf, rather than back home in London or New York, in spite of lingering concerns that there are not enough banking fees for the long list of recent newcomers.
Two years ago, when banks such as Morgan Stanley and Deutsche Bank were betting on the Gulf as the “next China”, two-year guaranteed bonuses were common as whole teams were poached at vast premiums.
Now, as more bankers seek work in Dubai, the premier staging post for the booming oil rich region, the laws of supply and demand are kicking in.
“Bankers who are under threat in London or New York may have less bargaining power if they are asked to relocate to the Middle East,” says David Johnson, regional chief for headhunter Whitehead Mann. “You may therefore see a reduction in packages being offered.”
At the height of the Gulf poaching frenzy, managing directors were commanding two-year guaranteed basic salaries of $1m, which has now slumped to $500,000-$750,000, says one banker building a team in Dubai.
He now believes he can lure people with the equivalent of London basic salaries of $300,000 or $400,000 for New York bankers, bolstered by benefits and the Gulf’s tax-free living. But Mr Johnson warns against hiring cheap bankers who lack experience.
”A few months ago, I wasn’t getting too many good CVs,” says one senior banker with a European investment bank.
“Now I am being offered class acts, though not all of them have the relationships needed to do business in this region.”
As the coalface of Middle Eastern investment banking moves deeper into the outer reaches of the Saudi economy, Arabic-speaking bankers command the highest premiums.
Bankers are sifting through the 40-strong contingent at Lehman Brothers’ DIFC offices, who did not get paid this week.
Lehman veteran Makram Azar, who was global head of sovereign wealth funds, has within days of the company’s bankruptcy signed up to launch a regional office for private equity giant Kohlberg Kravis Roberts.
Other Lehman staff might be less lucky. Some had relocated to Dubai weeks ahead of the collapse and have since been approached by the removal companies who cannot invoice Lehman.
The governor of the Dubai International Financial Centre, Omar bin Sulaiman, has promised to bend the rules to help them out.
The DIFC will extend visas to let employees find another job, and may even respond to requests from employees who cannot meet financial demands.