The wealth management sector in UAE is on course for increasing consolidation in the coming years, as a booming economy and increased infrastructure spending attract local and international operators, according to James Fleming, the global CEO of the British private bank Arbuthnot Latham.
“One of the prevalent features of the global banking sector right now is that bigger institutions are looking at markets which they just cannot compete in because they haven’t got critical mass,” Fleming was quoted as saying by told The National.
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“We’ve certainly seen that in Dubai with some of those big names taking a conscious decision to pull out and compete where they’ve got a larger base,” he added.
Clariden Leu, Merrill Lynch, Pictet and Vontobel have ceased offering private banking services in the region in the past two years, either by offloading them to others or simply shutting up shop.
Portugal’s ES Bankers is in the process of being liquidated, in the wake of wider problems affecting its parent company Espirito Santo.
Despite such closures and consolidations, the wealth management market in the UAE does not suffer from a lack of players, Paul Millar, Arbuthnot Latham’s managing director in Dubai was quoted as saying by the publication.
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By GlobalData“It’s an extremely competitive market we’re operating in, with around 65 private banks operating here in the GCC, as well as numerous larger banks offering private banking and wealth management services, not to mention a huge tier of independent financial advisers,” he added.
Such competition is unsurprising given the uptick in economic performance in the UAE in recent years.
“When you see GDP growth running at over 5% this year, undoubtedly wealth creation continues to grow, and of course with wealth creation comes the need for wealth management,” Fleming said.
Private wealth in the Middle East and Africa grew by 11.6 per cent to reach US$5.2 trillion in 2013, driven by continued strong nominal GDP growth in the UAE, Saudi Arabia and Kuwait, and is expected to grow to around $7.2tn by the end of 2018, according to the Boston Consulting Group.
