Welcome to the monthly instalment of news and views from PBI’s sister company, WelathInsight – the leading provider of business intelligence for the wealth sector
Lower-tier millionaires drives demand for wealth management services in the UAE
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
The financial stability of the UAE as a result of a less oil dependent economy gives more confidence to international and domestic private banks and wealth management firms to operate, despite 55% decline of the oil prices in January 2015.
In effect, the UAE has paved its way through the current oil price upheaval; as 71% of UAE’s total GDP generates through the non-oil sectors.
The UAE’s wealth growth is evident in an increasing number of lower-tier millionaires. The country lower-tier millionaires accounted for 89.7% of the total number of HNWIs in 2013, and held 40.4% of HNWI wealth, making them the largest wealth band by volume and wealth. In 2013, there were 43,346 lower-tier millionaires in the UAE; the volume is projected to reach 50,757 by 2018.
Strong financial position of the UAE as a financial hub in the GCC countries, the development of Dubai International Finance Centre (DIFC) along with favorable business environments and tax haven have been facilitating the emergence of lower-tier millionaires in the country.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataLower-tier millionaires in the UAE has been fuelled by the growth of domestic and international small and medium sizes enterprises (SMEs), which established through entrepreneurship attitudes. The new millionaires in the Middle East like to be their own boss – it might be the best way to create wealth when you have a low start-up capital; your own opinion and expertise can be worth more than anticipated.
Consequently, Credit Suisse, UBS and Barclays together with numerous domestic wealth management firms have gained confidence and are offering private banking services and wealth management services. The services offered include wealth and investment solutions, asset management services and financial portfolio management to both domestic clients and expatriates.
Dr. Roselyn Lekdee, analyst
Roselyn.Lekdee@wealthinsight.com
Switzerland to continue growing, but will it be enough to remain the leader?
The year 2015 so far has not been the best of years for Switzerland and its banking sector, with fines accumulating to billions of dollars from the EU and the US, banks being put under the spotlight for hiding HNWI wealth overseas and problems in complying with FATCA regulations.
Despite these issues, HNWI wealth is still set to rise by 25.3% between 2014 and 2019 to US$2.0 trillion.
Switzerland has seen a slight drop in HNWI numbers from 312,045 in 2010 to 309,474 in 2014, although the HNW population is expected to grow by 25.3% to 407,221 by 2019. The total wealth of these HNWIs in Switzerland increased by 36.7% over the review period, from $1.0trn in 2010 to $1.4trn in 2014, progressing to $2.0trn by 2019.
Even though wealth growth has significantly improved within Switzerland, higher levels of wealth are being invested overseas, which is expected to increase from 54.0% ($754.5bn) in 2014 to 57.6% ($1.2trn) by 2019.
Wealth in Switzerland may well continue to move abroad due to problems that have arisen within the Swiss private banking system.
On top of this, the growing amount of wealth from high income developing countries is expected to be kept in their home country.
A prime example of this is the UAE, which is predicted to decrease its level of wealth overseas to 34.2% in 2018, less than the 36.3% seen in 2013. Lack of investment abroad shows how HNWIs are becoming more confident in their own private banking industry to look after their wealth.
A mixture of bad practice, increasing wealth kept at home and emerging private banking sectors in Singapore and Hong Kong could have a damaging effect on the Swiss private banking sector over the next five years, and without further prosecution of wrongdoers, Switzerland will struggle to carry on being the largest private banking sector in the world.
Tom Carlisle, analyst
Tom.Carlisle@wealthinsight.com
