Gulf Arab banks rival Morgan Stanley for talent

DUBAI (Reuters) - Gulf Arab financial service companies, such as National Bank of Kuwait (NBKK.KW: Quote, Profile, Research, Stock Buzz) and Dubai's Istithmar, are finding it harder and more expensive to recruit, adding to their costs and in some cases limiting expansion.

Competitors such as Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) and Goldman Sachs & Co. are setting up in Dubai and Saudi Arabia, driving up prices for investment specialists with skills in structuring financial deals, such as acquisitions and initial public offerings.

"If there is one thing that keeps me up at night it's hiring," said David Jackson, chief executive of Dubai government investment agency Istithmar which has invested at least $3 billion in the three years since it started, including $1 billion in Standard Chartered Plc (STAN.L: Quote, Profile, Research, Stock Buzz).

"It's the only thing that could stall our growth," Jackson said at the Reuters Middle East Investment Summit in Dubai that ended on Tuesday.

Last year, Istithmar missed its hiring target by 15, with 70 employees on the books by year-end rather than the planned 85.

Given the Gulf's relatively young national population, the domestic pool for recruitment is limited.

Even primary education only became widespread in Saudi Arabia, the United Arab Emirates and the four other Gulf Arab states after the oil boom for the 1970s.

Because of a lack of domestic engineering and financial skills, about 25 percent of the Gulf's 35 million people are nationals from outside the region, though the bulk are labourers and domestic workers.

"Finding talent is what our business is all about, and it's very hard," said Atif Abdulmalik, chief executive of Arcapita, a Bahrain-based sharia compliant private equity and investment company, which has done more than $18 billion of deals since it was set up in 1997.

The firm employs 180 people in Bahrain, and is expanding into Asia where it has opened an office in Singapore to tap markets in Japan, China and Malaysia.

Because the domestic talent pool is small, Gulf Arab companies have tended to rely on nationals from Europe and North America to run their affairs at the higher levels.

The president of Dubai-based Emirates, the largest Arab airline, is, for instance, British. The chief executive of National Bank of Kuwait, the Gulf's third-largest lender by market value, is Palestinian.

Though Gulf Arab cities like Dubai and, to a lesser extent, the Qatari capital Doha have been able attract educated, experienced investment specialists from North America and Europe, especially of Arab descent, supply still outpaces demand.

Compensation costs at Istithmar have risen 30 percent since 2004, Jackson said, without giving details.

At NBK Capital, National Bank of Kuwait's investment banking unit, the cost of hiring has risen 20 percent during the last year, George Nasra, the unit's chief executive said at the summit.

Investment specialists with 10 to 15 years experience demand at least $300,000 in salary and bonuses, Nasra said, not far off what they might get in New York or London.  Continued...