Some articles on this site are written to teach you something.
Others are designed to entertain or cause controversy.
And then some exist so that you, too, can learn how to lose your equity research job in the Middle East… by opening a library in Pakistan.
So is it entertainment? Controversy? A valuable life lesson? Maybe all of those and more?
I don’t claim to know.
But here’s the story, and it’s a good one:
From Real Estate Dreams to Canadian Big 5 Banking
Q: Before we get into this business of opening a library, how did you get started in the industry?
A: Sure. I went to the non-target of non-target schools in Canada – it was a school where no one even knew what “investment banking” was. You’d mention that and they’d think that you were a bank teller. It was so bad that its nickname was “Last chance U”.
While my school itself wasn’t great for recruiting at banks, they did have a solid co-op program and I got to work in the corporate finance division of a family-owned real estate company through that.
Oh, and even before I arrived at university I had also been dabbling in real estate with a friend: we had pooled some money together and bought property in my first year of university (yes, it was very cheap).
Both those experiences made me more interested in finance, but I had no way of getting in since I was at a small town at a non-target school, and, as previous interviewees have pointed out, competition for finance jobs in Canada is insane.
Q: So what was your plan at this point?
A: The only option even remotely finance-related was going to work for the mid-market commercial banking division of one of the Canadian Big 5 banks, which had a branch in my town.
The interview “process” consisted of 3 rounds with no technical questions, and they were interested in me mostly because of my RE internship and how I had met some well-known people in the community through that.
I ended up winning a full-time offer in this commercial banking role over 12-13 other candidates because:
- I had the real estate work experience;
- One of the people I met in previous internships was a client of the bank and he put in a good word for me;
- And finally, one of my professors knew one guy at this bank and I stood in his office asking for an email recommendation, literally until I saw him actually send the email.
Q: Wow, so I’m assuming you knew this professor pretty well…
A: Yeah, obviously you would not want to be that persistent if you barely know the guy.
Q: So how was this full-time role?
A: Horrible! It was just incredibly boring. “Credit analysis” sounds like it might be interesting, but you’re not building real models in commercial banking – you’re just using software from Moody’s (their “Financial Analyst” platform), plugging in numbers, and seeing what the output is.
And, incidentally, corporate banking isn’t even much different in many cases – just add a few 000’s to the end of the loan amounts.
Apparently, “back in the day” you used to do more of this analysis manually and it was more interesting since you got to look at credit profiles under different scenarios. But technology has made the job quite boring.
Q: So then you started looking for other roles early on?
A: I stayed there for close to a year, and then decided not only to leave the city, but also to leave the country. I knew I wouldn’t have a good shot at getting into finance in Toronto or New York or anywhere like that – so I decided to jump halfway across the world instead.
I had a friend of a family friend in Kuwait who ran an Islamic Finance consulting/training firm there, so I networked around a bit, offered to do some free project work for him, and he made me an offer to go work there.
Time to Leave the Country!
Q: So you just packed your bags and left for Kuwait?
A: Yeah, everyone thought I was crazy at the time. I got the offer, quit my rotational program at the bank right away, and then packed up and left Canada 2 weeks later.
I figured, “Well, there’s no way it could possibly be worse than my old job, or worse than going to Toronto and ending up in the back office.”
Q: But I’m guessing you were in for a surprise …
A: I arrived at the airport and this guy’s former Associate (who was heading off to business school) picked me up and said, “You have no idea what you’re getting into. You’ll want to leave within 1 week – this is a 1-man consulting firm where you only do Islamic Finance and you’re basically just doing random favors for the guy running it the whole time.”
Q: Encouraging words right when you arrive in a new country!
Did you even have a background in the Middle East / know Arabic / have an interest in Islamic Finance?
A: No, not really – my mom’s side of the family was from Pakistan, which isn’t in the Middle East at all, and I didn’t speak Arabic at all either.
While I didn’t mind learning about Islamic Finance, I also wasn’t super-interested in it.
I realized very quickly that this former Associate was 100% right: I had to get out of this consulting/training firm or I would go insane.
I had continued to network with the Associate while he was off at his MBA program, and he introduced me to his friend who happened to be the head of asset management at a well-known regional bank in the Middle East.
This bank was the equivalent of one of the Canadian Big 5 banks back home – in other words, I could have never even interviewed at a place like this if I had stayed at home in Canada.
Equity Research at a Regional Bank in the Middle East: An Alternate Dimension?
Q: So you landed an interview at a regional Middle Eastern bank via a referral from the guy you replaced at this quirky 1-man consulting/training firm. I love this story so far.
A: Sure. So I “interviewed for” the FIG equity research team at this bank. I put “interviewed for” in quotes because it was nothing like a real equity research interview.
It consisted of 4 rounds:
- Round 1 – HR Interview
- Round 2 – Interview with Director of Research and Assistant VP
- Round 3 – Interview with Lead Analyst and Senior Analyst
- Round 4 – On-site interview at their offices in Dubai. They gave me a “writing test,” but it was pretty simple: I just had to answer 3-4 “competency question”-like questions, such as describing my greatest accomplishment.
They did ask a few technical questions, e.g. how to calculate Free Cash Flow and what higher vs. lower P/E multiples mean for companies in the same industry, but there was no official stock pitch, case study, or modeling test.
Q: And you performed well enough to win the role.
A: Yeah – if you’re wondering how I even made it in, there were a few factors:
- I came from an unusual ethnic background (Pakistani/Dutch) and I was from Canada, which added some much-needed diversity to an otherwise exclusively Middle Eastern and South Asian research team – I still didn’t know Arabic, but I had more of a connection than someone with no ties to the region.
- While my previous experience wasn’t spectacular, it showed them that at least I had some exposure to FIG because of the commercial banking role and then my work in Islamic Finance.
So I relocated to Dubai, almost a year after I had graduated – in that single year I had already jumped from a Canadian Big 5 bank to a one-person consulting firm in Kuwait and now I was making another move.
Q: You have such a boring and uneventful life. So tell us about this role in equity research at the local bank in Dubai.
We’ve covered equity research before, so maybe you can focus on how it was different from what you see in NYC / London / other developed markets.
A: Sure. The FIG team was a 3-person team that covered around 15 banks in the GCC region (Saudi Arabia, Kuwait, Qatar, Bahrain, the UAE, and Oman) – not countries like Egypt, Jordan etc.
The main differences in this role vs. traditional equity research:
- There was almost no interaction with the buy-side – mostly because one of the senior people (the Director of Research) didn’t want anyone else to “usurp” his authority (yes, he was crazy).
- The Lead Analyst should have been spending 80% of his time on the phone with institutional investors, but wasn’t doing that at all. He was scared of his own shadow, had absolutely no leadership ability, and could barely even answer questions about the banks we had under coverage in a coherent way. Everyone on the team was just doing Excel work and report-writing.
- The Director of Research had a stranglehold over the entire place and didn’t want anyone talking to anyone outside the firm unless he was physically present. Even worse, since he was based in Kuwait while our research team was in Dubai, he had this whole arrangement where he would form these secret alliances with selected team members if they agreed to spy on the rest of the team members.
Right when I joined, one of my co-workers described it very well: “This place does not allow you to hit a brick wall, the brick wall hits you.”
I’ve heard similar stories at many other regional banks there – it’s a completely different dynamic from what you see at the international bulge bracket banks with presences in the Middle East, and at times it’s like an “Alice in Wonderland”-type experience where you think everyone is on drugs (well, except for the fact that they’re strictly forbidden in Islam).
Q: Well, it sounds like you were really moving up in the world.
What about the technical work and valuation?
A: That was all pretty standard. I mean, accounting is accounting and valuation is valuation… we still used Excel a lot and wrote a lot of reports on banks in the region.
- No one had a clue what the hell was going on – as in, we used a “discounted equity cash flow model” to value commercial banks. As you know from your own FIG modeling course and coverage here, that’s completely wrong and you use a dividend discount model and P/E and P/BV multiples instead.
- No one ever reads the reports – if you think it’s bad in developed markets, it was even worse there. There’s so little liquidity that many price-volume stock charts for companies resembled diagonal lines. Oddly enough, I think a frontier market like Pakistan actually has much better-developed and more liquid capital markets than some countries in the GCC region.
Q: And I’m going to guess that the pay and culture were also a little “different”…
A: Yeah. Let’s just say that I think your numbers on finance pay in the Middle East are completely wrong – it was a nice infographic, but in my experience there was a substantial discount to those numbers.
Q: Right, but you worked at a regional firm. Many of those numbers are coming from international / bulge bracket firms in the region.
A: Fair enough, but I still think the pay is lower than what you quoted. Yes, the lack of taxes is nice but you’re still looking at lower base and bonus numbers.
In practice, bonuses in the Middle East are really just a deferred portion of your base salary and are not really dependent on the actual performance of your individual group.
For example, there was a girl I knew who worked in a local private equity firm for an entire 4-year period who did not close a single deal, and yet received her full “bonus” every single year despite the fund not making any money.
And as for the culture: it was incredibly restrictive and the Director of Research was such a micromanaging psychopath that we couldn’t do anything outside of work without him finding out about it and then yelling at us for it.
For example, he “found out about” my real estate investments (from LinkedIn) and started interrogating me about them – even though I had made them years ago and wasn’t even actively doing anything with them anymore.
Then at one point, a friend back home in Canada and my one of my current co-workers and I got so bored at work that we decided to launch a non-profit focused on literacy.
The first major project we sourced was to build a library at an all-girls’ school in Pakistan.
We even got another large bank to sponsor the whole project, and did it completely outside of work hours…
Q: Please tell me he didn’t fly to Pakistan to tear down the library.
A: That would have been even better.
He found out about it all the way over in his office in Kuwait, called my co-worker and me into the video conference room, and said that we couldn’t do anything in Pakistan because “we might be flagged as a terrorist financing organization” (I’m not making this up).
I told him to contact the corporate social responsibility division of the bank that was going to sponsor it so he could verify that it was all legitimate, but he refused and so we canceled our plans and went back to work.
I thought everything was resolved, but that wasn’t quite true.
Q: Let me guess: he called you in to “discuss your performance.”
A: Almost! Bonus season had just arrived, and they called me into the conference room…
The Managing Director of HR flew over from Kuwait and he started off by giving me a very positive performance review, saying that I did my job really well, and that everyone liked me.
But then they suddenly said I had been dismissed and would be given 3 months’ salary as my severance package!
I instantly knew that the Director of Research had been behind it (he was conveniently not present during the exit interview), so I stormed out of the room to go look for the guy and went over to tell a co-worker first…
And that’s when I found him packing up his desk and heard that my entire team had actually been fired, all because we did something outside of work that this Director didn’t like.
Right before I left, I looked around the room and shouted out, “This place is dysfunctional. If I had secured the funds to build a library in Pakistan back home, I would have been on the front page of my local newspaper in Canada. Here, you get fired for doing anything good for other people.”
Q: I’m getting visions of that “I’m mad as hell and I’m not gonna take it anymore” scene from Network.
So besides this guy being crazy, what else could have caused this to happen?
A: The culture at these local firms is just not conducive to hobbies / interests / philanthropy. It’s not even an issue of “slacking off” and neglecting your work duties – this was equity research, not investment banking, so we actually had (some) free time.
This Director was incredibly insecure and had only worked in Egypt and Kuwait before and was a graduate of a no-name university in Egypt, and he felt threatened because some of us had worked and studied in Western countries and actually wanted to do something entrepreneurial outside of work.
The co-worker who was a Senior Analyst and was fired alongside me was given the axe because he always wanted to do things the right way, e.g. use a dividend discount model to value commercial banks rather than a DCF.
He was by far the smartest person on the entire 20-person research team, but it was such a dysfunctional place that they fired him for that.
Finally, there’s the attitude prevalent at many regional Middle Eastern firms that once you receive a salary, you’re their “property” and you have to do whatever they force you to.
Q: OK, so now you’re worse off than when you started because you’re in a region where you don’t know many people, far from home, and you just lost your job and your entire team got fired.
A: I started interviewing for IB jobs almost immediately in Qatar and other countries in the Middle East, but my knowledge base and technical skills weren’t strong enough at the time to make the transition to investment banking or even the buy-side.
I realized that maybe I should just leave the region altogether since I wasn’t enjoying it at all – so I decided to apply to Master’s programs in Europe (with Canada and the US already crossed off my list, Europe was the next logical step).
I got accepted to a few top programs, and while I enrolled in one of them (this was now around 2 full years after I had graduated), I also kept interviewing on the side and won a couple offers for that upcoming summer prior to the program starting, including options for boutique bank and corporate finance roles.
Q: OK, so why don’t you walk us through what happened at this Master’s program first.
A: Sure. There were lots of smart people with “blue chip backgrounds” there, but the actual finance course materials weren’t great. They were extremely qualitative and I already knew most of it from undergrad.
A lot of banks and finance firms came to campus, but few recruited Master’s students specifically – to give you an idea of numbers, only 3 out of 45 classmates won job offers by graduation, and this was at a supposedly top school in the UK. Many of the students were international, so they had to head back home afterward and mostly returned to their previous employers.
I had “hedged” myself by continuing to interview and network on the side, skipped classes and program events frequently to meet as many people as possible in London, and I had all my previous experience to fall back on, so I was in better shape.
I ended up doing a summer internship at the NY office of a boutique bank from the Middle East the summer before the Master’s program started, and spent my time in both places. It was unpaid, but they did cover my living expenses and put me up at a really nice hotel in Manhattan so it actually worked out better than most IB internships at large banks.
The work itself was a mix of private placements and a few sell-side M&A mandates in Turkey, the Middle East, and North Africa, and they focused on real estate, which was a perfect match for my background.
Victory At Last?
Q: OK, so you get this internship, and unlike most of your classmates you now have a decent chance of a full-time offer… what then?
A: They really wanted me to start early and one guy there kept calling to ask if I would go back.
I liked the firm and the work, but I didn’t want to go back to NY or the Middle East, so I held out for a bit.
At the last minute, a boutique bank in London that I had applied to a long time ago called me and had me fly back for the interview.
I had applied to this place at least 7 times and called 15 or 16 times until I got through to them.
They were founded by MBAs who had worked in continental Europe in a bunch of different roles in capital raising and M&A, with a focus on distressed deals and special situations. They also did some principal investing, so it was more of a merchant bank.
They found distressed deals / companies in continental Europe, won funding or investor interest in London, and served as a “link” between the two regions.
Unlike most other banks, they’ve grown aggressively in the past few years and have opened offices in Amsterdam and Berlin, even with the fiscal mess in Europe ongoing.
Q: So you interviewed there and got the offer?
A: Yeah, pretty much. It was quite informal but they mostly asked about my deal experience, some valuation-related questions and how much I knew about distressed / special situations, which I had to read up on in advance.
More than in other regions, I found that the interview and recruitment process in Europe revolve much more around fit and motivation as opposed to a blind reliance on technical ability like in Canada.
I’ve gotten to work on some pretty interesting deals over my past year here – restructuring, mezzanine refinancings, equity financings for privatizations, and more.
Q: Wait a minute, you’ve been there for almost a year.
Doesn’t that mean that it’s time for you to go jump to Indonesia or South Africa or something?
A: Hah, maybe. I actually have no interest in moving right now because I’ve finally found a role I really like.
I have some interest in working in continental Europe eventually, but with the economic situation right now that’s probably not the best option, at least in non-distressed-type roles.
So I have no plans to move anywhere else for now.
Q: Thanks. This was quite the story – any final words for our readers?
A: Sure… don’t assume you’re “stuck” just because you get into a crappy job or a role you don’t like.
As you can see from my story, it’s quite possible to hop around to all sorts of random positions, even in a bad economy as long as you leverage whatever resources are available to you.
Canada is probably the most isolated developed country in terms of international work opportunities in finance (as compared to the US, UK/Europe/Australia), so if I was able to do it as a “Last Chance U” graduate, then anybody has a shot.
Always “hedge yourself” by continuing to network and interview even when you’re in a supposedly “top” Master’s program.
And finally, if you ever end up working in equity research at a local bank in Dubai, resist the temptation to build a library at an all-girls’ school in Pakistan…
Unless you’re looking to get fired.