As M&A volumes take a nosedive in the west, investment bankers are being lured to where the action is – the Middle East.

Data from Bloomberg suggests the value of announced mergers and acquisitions globally has slumped to $656.2bn in Q1 of this year, down from $971bn in 2007.

In contrast, Bloomberg says M&A volumes in the Gulf have doubled from this time last year, to $55bn.

Meanwhile, research from Kuwait Financial Centre – Markaz – has suggested that there is internal pressure on GCC companies to expand through acquisition, a trend particularly prevalent in the banking sector.

Last year Emirates International Bank merged with Bank of Dubai to form the region’s biggest bank – Emirates NBD. Markaz predicts a similar mega-merger in Abu-Dhabi in 2008.

As M&A bankers typically reside in financial centres like London and New York, it’s always been an uphill struggle to attract them to the GCC.

But this is changing, reckons Carmen Jreissati, head of human resources MENA at Credit Suisse: “There’s been an influx of investment bankers who are willing to come to Dubai and at slightly better prices than has previously been the case.”

Pay in M&A has been on an upward trajectory over the past few years. Alex Cormack, director, head of Middle East at recruiters Sheffield Haworth, reckons managing directors can expect total compensation of $1.2m-$3m. Even the lowly analyst can take home $82k-$93k, plus 100% bonus.

In spite of the increased activity, Martin McGuigan, senior consultant, executive compensation and rewards at Towers Perrin, thinks salaries could plateau.

“Instead, pressure will be related directly to performance. In London and New York, investment bankers aren’t taking home multi-million dollar pay cheques. It’s all about bonuses and should be the same in the Middle East,” he says.

And in an area where staff turnover and poaching is a problem, McGuigan thinks that stock options will be increasingly used to encourage loyalty.

“Individuals need to be locked in to encourage stability. Bankers are currently being offered silly money to jump ship.”