The Middle East financial sector faces a bout of job-hopping not seen since the boom years of 2006-07 as bankers look for new opportunities following disappointment over bonus payments - despite an increase.
Nearly 60% of the respondents to the eFinancialCareers 2014 Middle East bonus survey said they would be looking leave their current employer following dissatisfaction with their variable remuneration. This is despite the fact that 46.3% claimed to have received a bonus uplift on 2013, while just 21.3% of respondents received less and 25% said that their payout remained the same.
The vast majority were underwhelmed with the figure offered by their employer for 2013 performance, with just 9.3% saying it exceeded their expectations. Instead, 48.7% were disappointed with this year’s bonus and 34.7% said it was in line with what they were anticipating.
Looking at the absolute figures cited by respondents, it’s easy to see why many were frustrated. Average bonuses across the region were $22.7k, with bankers in Saudi Arabia the best remunerated (a mean of $32.1k), followed by Qatar ($21.9k), United Arab Emirates ($20k) and Kuwait with $11.3k.
Compared to their peers in other large financial centres, Middle East bankers are underpaid. In London, the average bonus was $89k, our research suggest, $72k in the U.S and $32.6k in Hong Kong. Only Singapore, where a high percentage of respondents worked in back office functions, had a lower average than the Middle East, with $20.2k.
Investment banking had a much better year across the Middle East in 2013, with fees up 20% to $733m, according to figures from Thomson Reuters. While this is positive, it’s still around half the $1.4bn earned in the peak of 2007.
Meanwhile, the large regional corporate banks have been posting some positive results. Emirates NBD reported a 25% increase in earnings during the first quarter of 2014, while First Gulf Bank’s market value jumped by 27% and the National Bank of Abu Dhabi posted improved returns despite a difficult year when it laid off 100 employees.
In line with other parts of the world, however, bankers in the Middle East credited an increase in bonus payments to their own performance. While 28% said that an improvement in company revenues helped push up their bonus payments, around 47% of respondents cited their own performance as the key reason for an increase.
Click for an infographic of the eFinancialCareers 2014 bonus survey results:
It’s understandable, therefore, that firms are making attempts to retain their employees, but recruiters are already reporting some fall out from bonus disgruntlement.
“There’s confidence in the banking recruitment market for the first time in years, so anyone who is not happy with their bonus has plenty of alternatives,” says James Collin, managing consultant at headhunters Cobalt in Dubai. “What we’re seeing is an increase in counter-offers and rapid salary inflation across both corporate and investment banking.”
Most people are being offered a 15% increase in their salary when moving to a new role, plus on the odd occasion the prospect of a guaranteed bonus, says Collin. The result is that existing employers offer a 25-30% increase in base pay as a counter-offer and any new recruiting company can ultimately end up paying a 40-50% mark-up on previous packages to secure a new employee.