Soha Nashaat was not expecting a pot of gold at the end of the Gulf rainbow when she landed in Dubai to head Barclays Wealth’s regional operations, but she did find a wealth of opportunities.
“It has blown my expectations out of the water,” says Nashaat, who swapped London for Dubai and Merrill Lynch for Barclays Wealth eighteen months ago. “I am an Arab and have been traveling to the region on and off since the early nineties. If you had asked me in the nineties I would not have thought I will be here managing such an incredibly fast growing business.”
Nashaat is part of the growing legion of high-profile financial services professionals with star-studded CVs who are calling the region their new home. She is in good company — Citigroup is sending Alberto Verme, its global investment banking co-head, to Dubai from London, while Barclays ME has also created a new post of Middle East chairman for Roger Jenkins.
Other Wall Street giants such as Morgan Stanley recently recruited three key executives to manage its private equity and SWF investors, while Lehman Brothers have also made senior appointments. And over the past three years, Deutsche Bank has built an impressive presence in MENA tripling its headcount to more than 180 staff.
Ask regional investment bankers about these high-profile moves, and some dismiss it off-hand. “They will leave at the first sign of trouble,” says Talal F. Samhouri, head of MENA Asset Management at Kuwait’s Global Investment House, one of the region’s biggest regional asset management players.
It’s a two-way street, says another senior regional private equity player. “They will have something to teach us, but we will have something to teach them as well.”
Regardless, the international players are certainly getting more entrenched. Apart from regional SWFs scouring international financial institutions, some international investment houses have also started to secure M&A deals as well.
Franklin Templeton recently bought a 25 percent stake in Algebra Capital, while international players such as Prudential have bought a 39 percent stake in a venture that will acquire the Takaful Ta’awuni life-insurance business owned by Bank Aljazira of Saudi Arabia. Is there room for all these players, or is it a reshuffling of top management to different geographies till the subprime storm passes away? AT Kearney believes it’s the $4 trillion of investible ME funds that will keep the international players interested. The consultants expect this figure to rise to $15 trillion by 2015.
Stéphane Battistella, senior executive officer at Schroders, says the arrival of international banks has nothing to do with the subprime credit crisis or the difficult situation in the US and UK. “It is not a negative choice to reshuffle top management and bring them to this part of the world. The change started two to three years ago, much before the crisis and at least our feeling is that we are here because we believe there is long-term growth happening in the region,” says Battistella.
And it is not just the typical ADIAs and KIAs getting attention from the banking blue-chips. “It is not just about the Sovereign Wealth Funds,” says Nashaat. “The nice thing about the region is that apart from the big players, there has been so much wealth generation across the region. We are not just talking about the GCC for expansion — it also includes Egypt and wider North Africa. There is enough depth of target clients — the growth is certainly not a flash in the pan.”
The great revelation has been the family office and private firms across the wider region for most asset managers. “Being here has given us the opportunity to tap into midsize institutions (non-SWF, central banks or government entities) such as family offices and private banks,” says Battistella adding that his institution has already been dealing with SWFs for decades.
“I admit we could not have covered these mid-size clients without being in the region. Also our clients will not understand that we are not close to them.” Mix an influx of high-profile financial services rock stars with petrodollars and you have a heady cocktail of growth. But something has got to give soon as the talent crunch — the mid-level management that will be executing the myriad deals these banking stars will set up — is impacting expansion plans. Nashaat does not rule out a possible M&A phase in the region in the next few years to bring in some sense of consolidation in the industry. “It is very possible in the future. There are people coming in DIFC, but this is not a get-rich quick scheme, there is no pot at the end of the rainbow. You have to stay true to your course and go through the entire cycle of development,” says Nashaat. “We are not leaving at the first sign of trouble — not going to happen.”
(Yadullah Ijtehadi is managing editor, Zawya.com, Dubai)
