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Best Languages To Learn For Investment Banking – Part III: French, Arabic & Spanish

This is a four part series on language in business. In our first article, we outlined the usefulness of knowing an additional language for business – in particular, finance. In our second article, we wrote about why we feel Chinese is the most useful language to learn for work. In our fourth article, we will elaborate on what other languages will be most useful in today and tomorrow’s global economy, and which ones won’t be.

Article I: Best Languages to Learn for Investment Banking
Article II: Chinese in Today and Tomorrow’s Financial World

French for Investment Banking and Business

As is, there is a sizable client base that is French speaking. France is one of the largest and most influential economies in Europe, Quebec is a large regional market in Canada and there is some activity in the Benelux economic area. Swiss German is the most important language in Switzerland, but Geneva is French.

However, almost all French executives in Europe are proficient in English. Being a good salesperson there has more to do with cultural understanding and sophistication than language, although an advanced level of French will be the floor. There is no shortage of talent in Europe, so learning the language will not give you an edge.

The next major frontier is Africa. Potential is immense in Africa as they are starting with a clean slate in terms of business models and frameworks unlike Latin America (established democracies with entrenched public interest groups), while African demographics are favorable (young population with growing life expectancies). The next boom will be driven by China, as she is looking for consumer markets for value added products produced in China while requiring basic materials that are abundant in Africa.

China has earmarked Africa for substantial foreign direct investment (FDI) to help get it there, including massive infrastructure build led by Chinese institutions including the Asian Infrastructure Investment Bank (AIIB).

At the height of imperialism, the British Empire claimed most of the strategic countries across the globe (Egypt for the Suez Canal, India for resources, South Africa for diamonds, major ports including Hong Kong) while the French colonized large swathes of desert which served to look good on a world map. Today, previous French colonies encompass much of North, West and Central Africa that have large soft (agriculture, coffee, cocoa) and hard (metals) commodity stocks. For any infrastructure project, Chinese growth is sure to follow.

French as a standalone is very powerful in this regard. Combined with Chinese, the competitive advantage magnifies.

Although Africa is tomorrow’s engine of growth, economies are still in their infancy and will require time before capital markets mature. Realistically, this will not be in our working lifetimes. Areas where French would be particularly useful would include project finance, infrastructure, power & utilities, oil & gas, mining, and sovereign and government debt capital markets.

Investment Banking in Quebec

Where picking up French is most helpful today is in Quebec. Quebec is a large, unique market in Canada with a surprisingly large number of corporate headquarters in Canada being based out of Montreal. As Montreal services a Province with over 8 million people, large national firms, financial institutions (credit unions, pension funds), and Francophone Canada, a large number of banks have a presence there, including most bulge bracket investment banks.

Overall, Quebec is still a small market versus French Europe, but learning French is far more useful there because there is a lack of qualified candidates. Montreal requires financial professionals to be perfectly bilingual, and the business community there is very small. Fluent French and English with good finance marks can get you in the door when you may not be competitive elsewhere.

Of course, we would not recommend learning French to futureproof your career or give yourself an edge only to work in Quebec.

Arabic for Finance and Investment Banking

Arabic will be an extremely powerful language as there are unprecedented socioeconomic shifts in the Middle East. The Arab world has historically held clout through its large hydrocarbon reserves – both in oil (Saudi Arabia, Iraq, Kuwait, and the UAE – Abu Dhabi in particular) and gas (Qatar).

Arab countries have been inextricably linked with OPEC, which as a standalone still holds enormous influence in geopolitics due to their proportion of daily oil production and Qatar’s dominance in liquefied natural gas (LNG) exports and leadership in gas-to-liquids (GTL) infrastructure.

Investment Banking in the Middle East Today

Arabic is possibly the language that could get the highest return on investment right now IF you are comfortable with living in the Middle East, as it is far more niche than the other languages we have listed while the opportunity is great. Due to a shortage of qualified domestic talent pertaining to professional jobs (locals are arguably disincentivized from corporate jobs due to a liberal welfare net funded by oil revenues in many petrostates), Gulf nations lean heavily on foreign know-how via expatriates.

At Vice President and above, generous expat packages are available for professionals with expertise in energy without Arabic. However, knowledge of the language is a definite boost and may get you in the door even at an entry-level position. Salaries are on par with the US with the bonus of practically zero tax and all-inclusive housing, which means that the difference in disposable income is immense. Hours are much softer in the Gulf States and there is usually ample vacation time (often with compensated flights).

The catch, of course, is that this work entails living in the Middle East, which is a major lifestyle decision for most people even if only for a few years. Other than Dubai, which is a tourism capital, expatriates may find themselves in a bubble confined in a compound with other expatriates with no contact with the outside world. There are myriad restrictions as well in terms of social liberties that can be explored in detail on expat forums.

Arabic for Finance and Investment Banking in The Future

The benefits and costs of working in the Arab world today are already well documented – however, the real benefit to learning Arabic should pay dividends due to the secular shifts in the region. Two of the common themes that we touch upon in this site are:

  • the eventual displacement of oil as a transportation fuel via batteries fueled by renewable power – we opine that this reality is quite far in the future, but for countries with oil reserves as large as Saudi Arabia with hundreds of years of reserve life, there is a major preference to produce now as opposed to later
  • a shrinking proportion of global reserves as new technologies such as hydraulic fracturing diminishes the relevance of conventional production sources by becoming more abundant and cheaper

The Gulf States are wary of these themes and are looking for compromise between culture and adapting to the new environment. Without control over global oil markets, the very concentrated primary revenue stream of the government (energy) may not be sufficient to fund budgets with generous social welfare. Doha (Qatar) and Dubai (UAE) have already made strides to diversify their economies through major spending on education for their own human capital, tourism, and innovation.

Nations that were wasteful with gasoline are now looking at solar and futuristic solutions for modern life. Now the most important country in the Gulf, the Kingdom of Saudi Arabia (KSA), led by the progressive Crown Prince Mohammad bin Salman, has also begun to tilt towards monetizing oil reserves now (as evidenced by the Saudi Aramco IPO talk) and spending money on innovation. Softbank is one step ahead of us, jumping in to pitch their Vision Fund.

As these trends accelerate (the monetization of oil, which means equity sales and higher capex to fund production growth, and spending on diversification for the economy), the lack of current experts becomes more pronounced. As such, across all capital markets platforms, there will be a need for talented professionals. Understanding Arabic makes you invaluable. Anyone who is also willing to pick up Islamic Finance will have an even sharper edge – should anyone in DCM learn how to structure a bond so that it is sukuk, they will have carved out an unassailable niche.

Business will likely be conducted out of Dubai, although KSA and Qatar may want to liberalize cities (Riyadh and Doha) to new financial hubs to get a better share of economic activity. Singapore may also be a good candidate due to their strong legal frameworks. Wherever business is done, you can expect many countries in North Africa to also be ripe for business, expanding the coverage base. Although oil and gas, basic materials (for petrochemical plants) and infrastructure will still be the most coveted industries, expertise in all product groups and industries will be required due to the diversification angle.

As with all other languages, it is a strong combination with Chinese. Although the US has historically kept a strong relationship with KSA and oil has traded in US dollars globally, China is responsible for the majority of oil demand growth today and there have been conversations about switching payment settlement to RMB.

Spanish for Investment Banking and Business

The number of Spanish speakers is far greater than French speakers with very strong potential in terms of demographics in Latin America. There are already seasoned capital markets issuers in Latin America and offices in major centres such as Mexico City, Buenos Aires and Santiago with representation from global and regional banks.

Various countries have come out of geopolitical strife and are increasingly free market, including Columbia and Peru. In addition to favorable demographics and an improving business environment in some countries, Latin America is abundant in natural resources.

While the opportunities are vast, we anticipate that there are difficulties in extracting as much value from knowing Spanish versus French on a go-forward basis because there are already entrenched establishment figures in Latin America with wealth and know-how while most financiers are capable of speaking English. Also, there is no shortage of Spanish speakers within and outside of the Spanish world who are industry professionals.

There will undoubtedly be foreign investment in Latin America from China, but not to the same extent as Africa for the time being due to political allegiances for many countries with the US and more difficult socioeconomic sensitivities to manage in a historically pro-labour group of countries.

With all of that said, French and Spanish are similar as far as Romance languages go and mastery of either means that the other can be picked up relatively quickly.

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Matt
ex investment banking associate
https://www.linkedin.com/in/matt-walker-ssh/

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