With the financial crisis winding down, hiring is set to cautiously resume in the region’s banks. Executive spoke with Panos Manolopoulos, vice president for the Middle East at Stanton Chase, an executive search and compensation consultancy, to find out what financial jobseekers can expect to see in 2010.
E Did the banking sector see the trimming down of personnel as much as other sectors?
There were a lot of losses in most parts of the banking sector. The mortgage losses were the centerpiece of the crisis and of course that led to many layoffs and, in turn, restructuring. So all the players took a hit and no one can claim to have been unscratched. JP Morgan, HSBC, Goldman Sachs, Bank of America; everyone has felt it.
There has been a trimming down of personnel as much as other sectors and in some cases even more. But things are getting back to normal a little bit right now, because we are seeing some light at the end of the tunnel. Some financial institutions are again searching for talented people, but they are very cautious right now. They don’t want to revisit the nasty experience that they had in 2009.
E How has compensation in the banking industry changed since the financial crisis?
In terms of base salaries for top performing senior managers it has not changed much. Of course, finding the right [chief executive officer], [chief financial officer] or head of capital markets is not an easy task. And the list of competent people who can deliver is short. So the top jobs continue to post top salaries. Where do we see changes? It is in bonuses and payouts, which are not being paid by many organizations this year. Some housing allowances dropped approximately 40 percent, or in some extreme cases they have been completely cut from the budget. There are some clients that are much more reluctant to [hire internationally], as they feel that the talent in the local pool is far more accessible to them.
This is a trend that we see growing over the coming years. Generally speaking, this ‘Emiratization,’ or general nationalization of human resources is the trend. And of course at the forefront is the banking sector.
E Which countries in the region have the highest paid bankers and is there any explanation as to why?
Generally Saudi is booming and everyone is trying to get a piece of the pie. I think that the bankers with key relationships in the region will simply be doing better than their peers and make the most money.
In a very simplistic approach I would say that Saudi, being the least regulated market in terms of salary levels, and at the same time having big opportunities is the reason for some bankers there making good money.
E How much does compensation differ from bank to bank in the region? What is the reason behind these differences?
Unfortunately, compensation differs tremendously from bank to bank and the main reason is that it isn’t a mature market. During the boom, banks could not find enough staff to manage their gold, so they hired people who could grow into the roles to which they were assigned. This created internal inequity, because all of a sudden you had someone with eight years of experience earning the same as someone with three years of experience. The banking market is fragmented and I think it will take some time for there to be some regulation.
E Does compensation at the state-owned banks hold up to private institutions?
[State-owned banks] are sometimes forced to be competitive when it comes to top executive jobs. Other times, with middle management jobs, they use the argument of being state-owned with some sort of rules about salary levels in order to negotiate, and because of that sometimes they are losing some good candidates. [Compensation at state-owned institutions] is lower.
E Are there any other trends that you expect to play major roles in 2010?
There will always be a fight to attract talented people, because it’s a hosting region. That will always continue to happen. But at the same time gradually over the years we will be seeing more and more locals occupying top jobs and climbing up the ladder.
E Are Lebanese bankers still in demand around the region or is this trend shifting as well?
[Yes, but] not because of their technical skills — we have found very strong bankers from multiple nationalities — but I think it is because of their overall package. And it is not a phenomenon particular to the banking sector, it is in all sectors. Why are Lebanese at the top of the list of the most wanted executives in general? It is because they have this combination of the Middle East experience with European, Western experience.
They speak three languages and have Arab culture but at the same time have Western culture. And the last, which I think is the most important, is that they have some entrepreneurial spirit, unlike the overall perception of the rest of the countries including the Levant neighbors.
The Lebanese can start a business and they are a lot better in business development. I wouldn’t say that they are better bankers in the sense that they are more technically equipped, but I think the whole package that they are carrying makes them look more attractive.
E What is the role of nepotism in hiring in the banking sector? Does this hurt the actual human talent of the bank?
Absolutely. We are beginning to see a trend of family conglomerates getting rid of nepotism, but it’s something that will not happen overnight. In most of the cases what we see is that there is good willingness, but when it comes to crises or decision-making processes, it is always an implication; meaning that the involvement of nepotism is higher than expected.
Sometimes the processes are not very transparent, because at the end of the day, the last word is the major shareholder or the family member that is the leader of the group. I think that the social structure of this region is influencing this and it will remain so for many years to come. It will be very difficult to get rid of it.
We are working outside the financial sector with a number of family conglomerates and we see that there is a willingness to get rid of [nepotism], but at the end of the day, it is part of the culture. It will not happen overnight or even over a generation.
It also varies across the region. It is a lot less in Lebanon. It’s a lot more in Saudi, in Oman and in Qatar.