Scorpio Partnership's Sebastian Dovey talks to Dominic Dudley and MEED about how international wealth management firms and private banks can tap into the growing market for wealth services in the Middle East.
On the wealth management trail: Seb Dovey talks to Dominic Dudley & MEED about the opportunity for private banks in the UAE and Middle East
ON THE WEALTH MANAGEMENT TRAIL WITH SEB DOVEY
Scorpio’s Seb Dovey enjoys getting out and about on the wealth management circuit
taking the industry’s pulse and sharing his own views and opinions about what wealth
In between the launch of our 2014 Wealth Management Deal Tracker and talking to
Spear’s about Scorpio joining forces with McLagan “to develop a ground-breaking range
of insight-based solutions that will provide wealth managers with the information that can
help them, not just understand better the business they have today, but the business
they want to have in the future”, he’s been talking to Dominic Dudley at MEED about how
international wealth management firms can tap into the growing market for wealth
services in the Middle East.
Banks target the region’s rich
As the wealth of the rich in the Middle East expands, competition to tap into that
market is growing for regional and international wealth management firms
11 December 2013 | By Dominic Dudley
The rich are getting richer and more numerous in the Middle East. Over the past year, the
number of ultra-high net worth individuals (those with at least $30m in investible assets)
has increased by more than 15 per cent in the region to reach 5,300 people. Their total
wealth rose even faster, growing by 24 per cent to $880bn, according to a joint report by
Swiss bank UBS and Wealth-X, a UK-based research firm.
Other parts of the world may have more multimillionaires, but a combination of high oil
revenues and strongly performing stock markets, among other things, means that few
places are growing as fast as the Middle East.
“The Middle East is just behind Asia and probably ahead of Latin America in terms
of growth prospects,” says one international banker specialising in wealth management.
“There is close to double-digit growth, driven by high and relatively stable oil prices and
places like the UAE and Qatar diversifying their economies, welcoming foreign
investment and becoming hubs between Asia and Europe.”
As his comments suggest, these days the focus of the private banking industry in the
region is on the Gulf economies. Although there are clients in Lebanon, Jordan, Egypt
and elsewhere, the political volatility in some of those markets, combined with the weak
growth in their economies, mean they are not seen as a compelling prospect for most
Within the Gulf, the greatest number of super-rich are in Saudi Arabia and the UAE.
Almost half of all ultra-high net worth people in the region live in those two countries, with
1,360 in Saudi Arabia and 1,050 in the UAE, according to Wealth-X. The Saudi Arabian’s
among them have an average net worth of $210m, which puts them slightly ahead of
their Emirati peers, who each have $181m on average.
Saudi Arabia and the UAE also rank highly when it comes to even wealthier people, with
two-thirds of the region’s billionaires calling those countries home. Saudi Arabia has 64 of
them, with an average wealth of $3.2bn each, placing it in ninth position in the world. The
UAE can claim 37 billionaires with an average net worth of $1.2bn. Riyadh has 25
billionaires, more than any other city in the region, although Dubai is only just behind with
24. Both cities rank in the top 10 in the world in terms of the number of billionaires.
When the region’s wealth is measured in other ways, different countries stand out. For
example, Qatar now has the highest density of millionaires in the world, according to a
report by the US’ Boston Consulting Group published earlier this year. It says 14.3 per
cent of households in the country have private wealth of at least $1m. The next richest by
this measure are Switzerland, with 11.6 per cent of households, and Kuwait, with 11.5
Qatar also comes top within the region when counting the proportion of households with
at least $100m in private wealth, with 8 per cent of homes in this category. It is followed
among Gulf countries by Kuwait, with 7 per cent, and the UAE, with 3 per cent.
All this offers rich pickings for institutions providing wealth management services.
Traditionally, this has been a part of the banking industry dominated by European and
US banks. A ranking of the top 20 wealth management firms around the world by
London-based research firm Scorpio Partnership is led by UBS, with $1.7 trillion of
assets under management, followed by Bank of America, Wells Fargo, Morgan Stanley,
all of the US and Switzerland’s Credit Suisse.
Such European and North American institutions often fair well in the Middle East. They
have prestigious brand names and their international reach means they can offer a range
of services in markets others find hard to match.
“We are noticing more and more that emerging markets clients are very similar
everywhere around the world,” says Bruno Daher, chief executive officer for Credit
Suisse in the Middle East and North Africa region.
“Clients from Brazil have a lot in common with those in Qatar or Indonesia. They tend to
be a bit more entrepreneurial than clients in Europe. They will look for opportunities in
other emerging market countries in Africa and Asia. It’s not only passive investments in
other countries. A lot of the ultra-high net worth clients are entrepreneurs with their own
businesses and they will look at opportunities in the same sectors in other emerging
There are some noticeable differences in the international banks’ strategies, however.
There is a divide between those that have a large presence on the ground in the region
and those that have opted for a more limited network of offices, flying in advisers as
“In the past two or three years, there’s been a reassessment by international banks of
how to build market share in Middle East wealth management, and whether to be on the
ground or to have a more transient private bank model,” says Sebastian Dovey,
managing partner at Scorpio Partnership. “A number of European operators, such as
HSBC and some Swiss private banks have decided they can cover the Middle East by
having a strong booking capability in Switzerland, London or the Channel Islands and
having private wealth managers and advisers visiting the region.”
He adds, however, that not all banks have taken this attitude. “Others have committed to
an onshore presence, including some US financial institutions. So there’s a mixed school
of thought among the international operators as to how to crack the wealth management
To read the rest of the article covering the competition coming from local banks and the
different client targeting approaches of different banks read the full article on Meed.com.
Dominic Dudley is a former deputy editor of MEED and freelance journalist. You can
find him on LinkedIn , visit his website www.domdudley.com or contact him by email:
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