Three years on, she has lured a number of her former Morgan Stanley colleagues to join her company, deNovo Corporate Advisors, which is helping small private Middle East companies that are looking for acquisitions, joint ventures or capital-raising opportunities in the region.

"We wanted to do something different to the international investment banks in that our advisory firm was created in the Middle East and our focus and strategy is entirely for the Middle East," said Nasrallah, sitting in her office on the 25th floor of Emirates Towers, a swanky office building in Dubai's financial hub overlooking the city's racecourse.

Nasrallah, who grew up mostly in Kuwait, is one of at least a dozen senior bankers in the Middle East who since the global financial crisis have opted to give up careers at large financial institutions to become entrepreneurs in the Gulf's expanding financial industry.

An economics and politics graduate of Massachusetts Institute of Technology, Nasrallah spent stints at Morgan Stanley in New York, London and Hong Kong before being promoted in 2005 to build the bank's Middle East and North Africa franchise. In 2009 she decided to put her international and local experience to use advising smaller companies, a sector she felt was being overlooked by the big multinational banks.

Global banks flocked to the Gulf during the boom years of 2003 to 2007, aiming to make a quick buck from the oil-rich region, but were mostly catering to large Middle Eastern corporations and sovereign wealth funds.

That strategy has proved far less lucrative in the past few years as the global financial crisis and economic downturn have forced those customers to refocus on their local markets.

According to Thomson Reuters data, 20 global banks earned a combined $234.8 million in fees from their Middle East business in the first half of this year. That was down from over $450 million earned in the first half of 2007, although up 5 percent from the same period last year.

But while global banks have retrenched in the region in the past few years, seasoned bankers who have spent years here say they are finding plenty of business opportunities because they understand the dynamics of doing business here and are committed to serving clients over the long term.

Setting up a business in Dubai or Abu Dhabi is also relatively easier than in most other large financial centers and has the added benefit of tax-free business zones.

Dubai issued 14,360 business licenses in 2011, according to the Department of Economic Development data, a 14 percent increase on the previous year.

"In my business, it is very simple. You are selling comfort and not just a product," said Pushpak Damodar, who worked at Deutsche Bank's (DBKGn.DE) asset management arm before setting up Global Frontiers Advisors in Dubai in 2009. The firm advises on private placements and provides research and consulting services to institutional investors seeking emerging and frontier markets exposure.

"Many of the institutions that came to the region during the boom time proved to have a short-term view, it was all about selling products and very little effort about understanding the regional requirements and building a longer-term presence."

Many global investors are now rethinking their strategy in the region and are looking for reliable partners to ensure they don't miss out on future growth prospects, he said.

"These markets are going to leapfrog in the years to come. If you don't get in now, then you will have a significant disadvantage five years down the line," Damodar said.

NATIONAL PRIDE

Zaid Maleh, a former head of Middle East and Africa investment banking for Moscow-based VTB Capital, set up DACH Advisory earlier this year to advise Russian companies among others. Clients include Russian venture capital firm Synergy Innovations, an affiliate of Synergy University, Russia's largest private university which is looking to set up a campus in the Middle East.

"There is a lot of interest among investors to be in this region. It's crucial to their future growth. You just have to find the right partners who are here for the long term," said Maleh, an Austrian national of Syrian origin.

As faster economic growth and rising incomes in the Middle East create business opportunities, Ziad Makkawi, a veteran Lebanese banker and entrepreneur, decided against retiring and instead set up Y+Ventures this year, a venture capital company he runs with a partner in Dubai.

He had helped set up Lebanon Invest, the region's first local investment bank in 1994 in Beirut, and later founded asset management firm Algebra Capital, which he sold to U.S. fund manager Franklin Templeton in 2009.

"After selling Algebra, I had pretty much thought about taking a break but since you can't teach an old dog new tricks, I decided to do what I know best, which is to set up companies and see them grow," Makkawi said.

Y+Ventures focuses on early stage investments in the MENA region, mainly in the digital, mobile phone and Internet sectors and supports young and female entrepreneurs in particular.

For entrepreneurs like Makkawi and Nasrallah the appeal of becoming an entrepreneur is reinforced by national pride.

"For me personally, it was partly to give back to the region ... where my roots are and to show that this part of the world can create what other regions have done successfully before," Nasrallah said.

For the region to succeed, however, it needs to develop a culture that accepts failure in business, said Makkawi. At present, business is so risk-averse that once a venture fails, it is rare to see those individuals coming back to the market with fresh ideas, he said.

"We benefit in the region in the sense that there is money flowing around, but unfortunately in this market there is still a lack of tolerance towards failure," he said.

"For entrepreneurship to evolve there needs to be a culture of failure. Even in the most developed nations, entrepreneurs have failed and then evolved."

(Editing by Susan Fenton)

• A Permanent Economic Emergency