Big bucks: Motorists top up fuel at a petrol station in Riyadh. State entities are hiring at breakneck speed, often recruiting staff from foreign firms based in the country, but some private equity funds say the costs are too high to open offices in the capital. — AFP
RIYADH: Even as the global financial community contends with layoffs and lower bonuses, banking jobs remain plentiful and salaries are surging in one unexpected corner of the world – Saudi Arabia.
It’s a pay boom driven by the expansionist zeal of Crown Prince Mohammed Bin Salman who is flush with cash from oil sales and determined to make the economy a financial powerhouse.
State vehicles like his Public Investment Fund (PIF), with more than US$600bil (RM2.7 trillion) of assets, are hiring at breakneck speed, often recruiting staff from foreign firms based in the country.
Wall Street banks are also desperate to expand, drawn by the promise of deals linked to an outsized attempt at economic reform.
But on the ground, hiring is proving to be a challenge. While MBS, as the de factor ruler is known, has eased many social regulations, alcohol is still banned and extramarital relations and homosexuality remain punishable as ‘moral crimes’.
The severe rules and the prospect of a monotonous lifestyle in Riyadh often make expatriates reluctant to move. Meanwhile, experienced local employees are in short supply.
That’s fuelling a fight for talent and boosting salaries, bankers and headhunters said.
Recruiter Hays Plc estimates that most banking professionals in Saudi Arabia can earn roughly 20% more than their counterparts in Western financial centres.
Those expatriate executives willing to relocate to the kingdom from neighboring Dubai can ask for 20% to 35% extra, according to headhunting firm Mark Williams. Senior hires are able to command even higher amounts.
Saudi Arabia “is like China two decades ago”, said Carmen Haddad, Citigroup Inc’s vice-chairperson for the Middle East and country officer in the kingdom.
At the same time, the kingdom’s fast-paced economic reforms also bring “fresh challenges such as an ongoing battle for talent in the financial sector,” said Haddad, who helped to rebuild the bank’s presence after a 13-year absence.
MBS has emphasised that if international companies want to do business in the kingdom they need to have an on-the-ground presence.
A recent rule also requires firms to recruit a certain number of Saudis. With many expatriates reluctant to make Saudi Arabia their home, locals believe they have particularly high negotiating power.
Senior executives at two international investment banks said they recently rejected Saudi candidates who had asked for salaries that would have made them some of the highest-paid employees at those firms globally.
Meanwhile, the PIF has been hiring and expanding rapidly as it invests to wean the country off its reliance on crude. It now employs about 2,000 people from just 40 about a decade ago.
The sovereign fund has been tempting some potential employees with a 30% hike over existing salaries, according to people with knowledge of the matter.
Increases were sometimes previously even higher, but the fund has in recent instances used 30% as an informal cap to stop packages from getting out of hand, according to the people, who asked not to be named discussing information that isn’t public.
Most packages also include perks such as housing and school fees, flight tickets home, as well a tax-free salary, meaning that expattiates moving to Saudi Arabia from countries such as the United Kingdom receive a huge boost.
Among the Saudi nationals who have made big moves are Abdullah Shaker and Fahad Al Saif, who joined the PIF in senior positions and had previous stints at HSBC.
The PIF’s governor Yasir Al-Rumayyan himself joined the fund from the investment banking unit of Banque Saudi Fransi that until recently was backed by Credit Agricole SA.
The churn of staff can give banks a network among their biggest clients, but it highlights some of the growing pains Saudi Arabia faces as it intensifies its efforts to diversify its economy.
Global banks face a particular challenge when expanding in the kingdom: while they rely on deals from entities such as the PIF, those same state vehicles are complicating those growth plans.
Another local, Eyas AlDossari, had stints at Goldman Sachs and HSBC before joining the fund.
“Saudi bankers are in high demand and so talent is scarce,” said Zaid Khaldi, regional co-chief executive officer for Goldman Sachs, which has been boosting headcount and plans to move into bigger offices this year to expand further.
But many foreigners are reluctant to move to a place that lacks the infrastructure, thriving social scene and availability of alcohol that make other global finance centres appealing.
Expatriates also regularly complain that Riyadh is a dull, desert city with little entertainment and little to do for kids.
One major private equity fund plans to set up its regional base in Doha or Abu Dhabi, despite coming under pressure from the Saudi government to open in Riyadh, because the costs are too high, according to its top executive in the region.
One Dubai-based boutique advisory will keep its headquarters in the city, even though it’s winning more business in Saudi Arabia, because the costs for local staff are restrictive, its managing director said.
To be sure, not all expatriates land in Saudi Arabia with bumper packages, and for some, the boost in income is mainly due to lower taxes in the country.
Also, banks sometimes choose to promote staff already on the ground.
Morgan Stanley elevated its Saudi Arabia chief executive officer, Abdulaziz AlAjaji, to joint regional head of its Middle East and North Africa business, replacing a Dubai-based veteran at the US bank.
Lazard Ltd recently appointed Sarah Al Suhaimi, one of the kingdom’s most seasoned female bankers, to lead its Middle East and North Africa advisory business out of Riyadh.
It also plans to make the Saudi capital its regional base, making it the first global bank headquartered out of the kingdom. Other banks may be soon left with little choice on whether to make the move.
The Saudi government has signalled to international firms that they need to set up their regional headquarters in the kingdom by the beginning of next year or risk losing business, meaning that the fight for talent may only intensify. — Bloomberg
