After a decade of dealmaking at Morgan Stanley (MS:US) in the Middle East, Peter Fort swapped Dubai’s International Financial Centre for a career promoting investment into one of the United Arab Emirates’ lesser-known sheikhdoms.
“When I first got the call about the position, it took a lot of convincing for me to take a look at it,” said Fort, who heads up Ras Al Khaimah’s free zone, and is an adviser to the emirate’s government, an hour’s drive north of Dubai. “But when I did my research I realized that Ras Al Khaimah is at an inflection point and I feel I can make a difference here.”
Fort, 40, is among a rising number of Persian Gulf expat bankers starting second careers with U.A.E. firms as lenders based in London, New York and Zurich scale back under pressure to boost capital buffers and profit margins. The 10 biggest investment banks, including JPMorgan Chase & Co. (JPM:US), Deutsche Bank AG and Citigroup Inc. have lost about 11,000 front-office staff in the past two years, analytics firm Coalition said last month.
Royal Bank of Scotland Group Plc. Middle East Chief Executive Officer Simon Penney resigned this year and will join Abu Dhabi’s First Gulf Bank. Michael Katounas, investment banking director for Credit Suisse Group AG in the Middle East, joined Qatari bank QInvest as investment bank head this year.
“As global players continue to move people back to Europe and the U.S., there are a lot of bankers in the market here that don’t want to go home,” Matthew Gribble, a Dubai-based managing director at recruiter Michael Page International Plc. (MPI), said in a phone interview. “They see the opportunities the region offers and are reluctant to leave behind the benefits, network and contacts they have made and so are pursuing positions here.”
Economies in the six-nation Gulf Cooperation Council are growing three times faster than developed markets as governments funnel oil wealth into infrastructure projects. Year-round sunshine, tax-free salaries and higher bonuses than their counterparts in Europe and the U.S., according to Gribble, all contribute to the allure of staying in the Gulf.
Fort, who declined to comment on his earnings in detail, said his total compensation in his new role is comparable to that at Morgan Stanley, with a higher salary and lower bonus. His appointment to Ras Al Khaimah was announced last month.
A spokesman for Morgan Stanley, who asked not to be identified under company policy, declined to comment, as did a Dubai-based spokesperson for RBS. A spokeswoman for Credit Suisse, asking not to be identified, also declined to comment.
Sovereign wealth funds in the Persian Gulf are also hiring investment bankers as they build up in-house teams in areas such as real estate and private equity. Abu Dhabi Investment Authority counts on external investors to manage about 75 percent of assets, down from 80 percent in 2011, it said in its annual report for last year released last month. It recently hired former Deutsche Bank executive John McCarthy as global head of infrastructure and appointed Gregory Eckersley head of its internal equities department. Colm Lanigan, a former Credit Suisse (CSGN) First Boston banker, was named head of Principal Investments in its private equity unit in October.
While grappling with demands to shore up capital and profit at home, overseas banks are facing increased pressure from local lenders in the Middle East. The share of fees for U.S. and Western European banks in the region fell to 43 percent last year, compared with 52 percent in 2011, according to Freeman & Co., a New York-based consulting company. The market share of local banks rose to 52 percent, from 39 percent, in that period.
Half of the top 20 banks advising on GCC debt sales this year are based in the Middle East, up from six a year earlier, as issuance rose 13 percent to $21 billion, data compiled by Bloomberg show. Dubai-based Emirates NBD PJSC (EMIRATES) is the region’s fifth-largest adviser this year after HSBC Holdings Plc (HSBA), Deutsche Bank, Standard Chartered and Citigroup, the data show. Emirates NBD climbed from the seventh position from a year ago.
“Local companies have become increasingly professional as the U.A.E. has reached a critical mass and facilities and amenities have developed,” said Emad Mostaque, London-based strategist at EMEA investment bank Noah Capital Markets.
Fort, who graduated in international political economics from Cambridge, Massachusetts-based Harvard, came to Dubai in 2006, at the height of the banking boom. He led over 50 mergers and acquisitions and restructuring deals. After ranking as the Middle East and Africa’s top M&A adviser in 2010, Morgan Stanley fell to seventh in 2011 and ninth last year, according to data compiled by Bloomberg. The volume of M&A deals in the region fell to $51 billion in 2012, from $63 billion in 2010.
“I stayed for as long as I did because I was hoping that the slowdown was only temporary and that the growth would return,” Fort said, adding that he was asked by the New York bank to move to London. “Since 2009, investment banking in the region hasn’t been quite as enjoyable as in the pre-crisis days. The competition became much more intense and often unhealthy.”
Morgan Stanley advised Abu Dhabi’s Sorouh Real Estate Co. on its merger with Aldar Properties PJSC, the emirate’s largest developer. It also advised Riyadh-based utility ACWA Power International when Saudi Arabian sovereign wealth fund Sanabil and the nation’s pension agency acquired 19 percent.
Fort’s new challenge is to funnel trade and investment into Ras Al Khaimah as the emirate seeks to emerge from the shadow of better known rivals Dubai and Abu Dhabi. Like its neighbors, Ras Al Khaimah has invested in trade infrastructure such as port facilities to compensate for a lack of oil and gas wealth. RAK Investment Authority, the company that manages investments in the sheikhdom, says its industrial parks are home to units of companies including Posco, Kempe Engineering and Dabur India Ltd.
Real Madrid, the world’s richest soccer club, said last April that it’s lending its name to a $1 billion soccer-themed resort in the emirate with a 10,000-seat stadium and a target of 1 million visitors a year. The 40-hectare (99-acre) project will include a marina, yacht club and museum as well as homes and a shopping mall.
“It’s a win-win situation,” Chavan Bhogaita, head of markets strategy at National Bank of Abu Dhabi, said by e-mail. “The employer gets to benefit from the substantial experience that such candidates bring to the table, and the employee gets to work for a very solid entity, in a part of the world that is still moving forward and growing rapidly -- both of which are becoming increasingly rare in the current environment.”
The region’s banks are also seeking expansion and a higher profile. NBAD, as the lender is known, this year appointed as Alex Thursby, former CEO for international and institutional banking at Melbourne-based Australia & New Zealand Banking Group Ltd. (ANZ), as CEO. Thursby will succeed Michael Tomalin.
The bank sold A$300 million ($308 million) of five-year Kangaroo bonds in March, the first Australian dollar-denominated notes by a Middle Eastern-based company since before the global credit crisis. Qatar National Bank SAQ, which ranked number one in Bloomberg Markets’ annual ranking of the world’s strongest banks, and Emirates NBD agreed to acquire Egyptian banks in December to gain access to the country’s 83 million people.
Dwindling trading volumes and a dearth of share sales in the six-member Gulf Cooperation Council after the financial crisis have forced some global banks to consider other fee-generating activities as the local competition increases.
RBS is targeting increased returns from derivatives sales in the region as earnings from arranging debt sales and lending fall. UBS AG (UBSN), Switzerland’s biggest bank, cut investment banking jobs in Dubai and relocated executives as it focuses on asset management and private banking in the region. The bank named Ali Janoudi as CEO for the Middle East and North Africa and said the position will relocate to Geneva from Dubai.
“The amount of investment bankers moving from international players to local banks and organizations says a lot about how much the investment banking industry has declined globally,” Fort said.
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