Financial institutions boosting staff numbers ahead of Saudi market opening

Deutsche Bank and Credit Suisse are among financial institutions seeking to hire traders in Saudi Arabia as the nation prepares to open its stock market to foreign investors, people with knowledge of the matter said.

Deutsche Bank is hiring for stock sales and trading, administrative staff and some junior roles, three of the people said, asking not to be identified as the plans aren’t public. Credit Suisse of Zurich also plans to hire for equities after losing traders to rivals, another person said. Bank of America may also expand its trading desk, three other people said.

“Saudi Arabia is a sizable opportunity for the large institutions,” Bassel Khatoun, Dubai-based head of Middle East North Africa equities at Franklin Templeton Investments (ME), said. “Hiring is happening on the back of confirmation that the market opening is on track.”

Banks are rebuilding trading teams in preparation for the opening of the largest Arab bourse in the first half after cutting back during the financial crisis. Morgan Stanley and Credit Suisse cut their equities business in Dubai in favour of Saudi Arabia about two years ago, with some traders from the Swiss bank then hired by Russia’s Renaissance Capital.

Some US banks are trying to poach staff from competitors including HSBC to fill positions, according to three of the people. The London-based bank has one of the largest teams among international lenders in Saudi Arabia and owns 40 per cent of Riyadh-based Saudi British Bank. Paul Harris, a spokesman for HSBC in Dubai, declined to comment.

Other firms such as Bank of America have been preparing for growth in Saudi Arabia for years. “We have been growing our team strategically over the last three years,” Arshad Ghafur, president of BofAMerrill Lynch in the Middle East and North Africa region, said. The bank moved its frontier market research business to Dubai from London late last year and has increased its sales, trading, and research operations, he said.

Saudi Arabia is “the most significant opportunity in 2015/16,” Mr Ghafur said, though he added that “it would be implausible to believe that hiring market professionals at this stage would be enough to prepare banks for the introduction of the QFI regime.”

Sofia Rehman, a spokeswoman for Credit Suisse in London, declined to comment.

“A potential further opening of the Saudi stock market would allow for banks to further grow their businesses in the Kingdom and to implement more resources,” Jamal Al Kishi, chief executive of Deutsche Securities Saudi Arabia, said, without giving details on hiring plans.

Regional banks are also preparing for the opening. Saudi Fransi Capital, the investment banking arm of Banque Saudi Fransi, is opening an office in Dubai to focus on asset management and brokerage activities, it said in January. Arqaam Capital, the Dubai-based investment bank, plans to open in Saudi Arabia in the second half to take advantage of rising demand for assets in the region.

The largest economy in the oil-producing GCC may open the stock market to overseas investors from April, three people briefed on the plans said in December. Opening the $542 billion exchange may prompt MSCI to include the bourse in its emerging market gauge by 2017, luring as much as $40 billion of foreign cash, Schroders said in July.

Investors from outside the six-nation GCC aren’t allowed to invest directly in stocks and have to get access to the market through equity swaps and exchange-traded funds.

“It’s a positive sign that the large institutions are coming to Saudi Arabia and a promising indicator of the institutionalization of the market,” said Mr Khatoun. “This region is quite complex to manage from outside so it’s vital to have a local presence.”

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