Wealth resurgence offers opportunities

Banks in the UAE rush to take advantage of a booming market in private wealth

At Mashreq, we believe in personalisation, tailoring our service to meet the needs of today’s wealthy clients.”

Vipul Kapur | Head of Private Banking with Mashreq

At a time of low interest rates and tepid economic growth, the banking sector is having to adjust to tough times. But there is at least one part of the market where things look rather bright.

Banks in the UAE are rushing to take advantage of a booming market in private wealth as more and more people join the ranks of the world’s hyper-rich. Private wealth in the UAE grew by 8.3 per cent in 2016 alone, according to a report by The Boston Consulting Group (BCG), “Global Wealth 2017: Transforming the Client Experience”.

While the pace is expected to slow, growth in wealth is still expected to rise steadily, at 7.4 per cent, over the next five years.

“As we see the region grow, there is no doubt that wealth in the region continues to grow,” says George Triplow, Associate Partner, Mena Wealth and Asset Management Leader at consultancy EY.

Wealth hub

Today, the UAE is increasingly attractive as an onshore hub for private banking as it competes with other more developed countries such as Switzerland and Singapore.

“The UAE has transformed itself into a place where not just the rich and wealthy have the ability to come in and establish a base, but it also provides them with trade and business opportunities,” says Vipul Kapur, Head of Private Banking with Mashreq. “And with a number of initiatives in the pipeline going forward, including Expo 2020, we see a growing number of new individuals coming into this market.”

“Dubai and Abu Dhabi have been magnets for not just attracting people from the Subcontinent, but now from the greater GCC, from the Levant and even as far as Europe and the Americas,” says Kapur.

Over the past decade, the boom in oil prices meant wealth generation not only for individuals, but also for governments in terms of sovereign funds. Banks like Mashreq are expanding their wealth management divisions by adding more talent, and bringing in products that appeal to the rich.

“Private clients are the ones we are able to provide our entire range of services to,” says Kapur. “So in the bank, we provide not just the traditional banking services through the branches, but also through our digital network as well.”

Sophisticated investors

The wealthy tend to be more “sophisticated” in the way they structure their finances, says Kapur. “One of the key things people look for is diversification.” Mashreq – the oldest private bank in the UAE – caters to clients with investable assets of $1 million (Dh3.67 million) and above.

“At Mashreq, we believe in personalisation, tailoring our service to meet the needs of today’s wealthy clients,” adds Kapur. “Every client is unique and we cater to his needs based on his specific requirements.”

Onshore investments

Today, the wealth management sector is also seeing a shift as clients prefer to invest part of their money onshore rather than moving it overseas.

“People in the Middle East who earlier used to place funds in other jurisdictions are happy to keep some of those funds in this market itself,” says Kapur.

The UAE was among the top 10 destinations globally for high-net-worth individuals, with several millionaires having migrated to the Emirates last year.

Going forward, there are a number of catalysts for growth in the region that include Saudi Arabia’s economic transformation plan and infrastructure projects that will be undertaken for Dubai’s Expo 2020.

“I have no doubt that this is one region that is going to continue to grow significantly,” says Kapur. “In terms of volume of assets under management you will see that our growth will be in significant double-digits as we go into the next three to five years.”