In 2018 the key focus for the banking sector has been around stress testing, which was reflected in recruitment trends and hiring levels.
We saw a renewed focus from banks to assess the robustness and effectiveness of their anti-money laundering and sanctions compliance programs. This is partly due to the next Financial Action Task Force (FATF) review that is due in the UAE in 2019. Although most banks performed well in terms of governance, training and assurance, there was a shortfall in monitoring, with three of the eight banks potentially requiring some remedial work.
With the International Financial Reporting Standard (IFRS) that came into effect on 1st January 2018, most banks were able to meet the date of initial implementation. However, more refined processes will have to be completed in 2019 before IFRS 9 becomes business as usual. The interdependency between the IT, finance and risk functions also highlights the need for a revised governance framework.
Banks in the UAE have many leasing arrangements that will fall under the scope of the new IFRS 16 standard that comes into effect on 1st January 2019. All elements of a bank, including branches, ATMs, IT infrastructure and outsourcing arrangements, will have to be assessed to evaluate the impact on their financial statements, operations and capital requirements. As a result of this extra workload, we expect an increase the number of technical finance roles in the first half of 2019.
The Basel III amendments (also referred to as Basel IV) to credit and operational risk are likely to be implemented in the UAE. This is expected to result in a reduction in the capital adequacy ratios for most banks. The methodology to calculate the amended numbers will require adjustments to systems as well as collection of additional data requirements, thus increasing recruitment needs across the middle office.
While many salary groups across the industry sectors will remain steady, initial indications are that we may see modest increases in key corporate governance roles within the GCC as demand outstrips supply.