Fees have yet to return to the heights they reached in the boom years causing banks to question if the region is value for money.
In spite of growing economies in the region and shrinking revenues in the western world, global banks have been shedding staff and selling off subsidiaries in the Middle East.
"The industry has shrunk at a rapid pace and as European and US revenues dry up, there is no appetite in bigger centres to subsidise business here,” Simon Penney, Chief Executive for Royal Bank of Scotland 's Middle East and Africa Unit, told Reuters. “In some respects, most of the banks were never really profitable in the region. Even in the boom period, the business was getting funded from outside to a large extent."
Middle Eastern investment banking fees totalled $402 million during the first nine months of 2012, according to Thomson Reuters’ data cited by Reuters. Although this represents a 23 per cent increase from 2011, it is still far below the levels seen in the boom years of 2005-07, when fees  averaged above a billion dollars annually.
Last year's fee increase can largely be attributed to an increase in debt issuance and bond arrangement activity, as opposed to traditional investment banking business, such as mergers and acquisitions, which fell 14 per cent to $103 million.
Global banking giants such as Deutsche Bank , Credit Suisse and Citigroup have all cut jobs in the region, and banks such as PNP Paribas have sold off Middle East subsidiaries.
"The perennial question for global banks has been to find the optimum operating model here. I have seen teams quadruple in size and go back to square one during my five to six years here," Reuters quoted a Dubai-based banker as saying.