The rise of the super-rich

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Optimistic: Bank Sarasin-Alpen MD Sharad Nair sees great potential in the Gulf’s private banking industry.

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Sharad Nair tells me something I will do my best to remember: "There are three people that a wealthy man will always surround himself with. That is his doctor, his lawyer and his private banker."

He imparts this knowledge with a grin. As a successful private banker with Swiss private bank, Bank Sarasin-Alpen (ME) he has had plenty of experience in the company of wealthy men.

He tells me another thing worth remembering. "The two main traits of human beings are greed and fear. The beauty is that greed is permanent but fear is temporary."

I am beginning to get the feeling that Nair is a bit more than a straightforward private banker. He is something of a psychologist with an astute sense of humanity's needs and desires, strengths and weaknesses.

And when it comes to tapping the wealth of the world's super-rich such insight is valuable.

We are sitting in Bank Sarasin-Alpen's slick offices in the Dubai International Financial Centre (DIFC). The aggressive air conditioning chills an atmosphere of quiet, calm diligence. An enhanced sense of secrecy pervades. Yet sporadically throughout the interview I see shapes through the frosted glass. There is talking, bantering and joking as shadows merge and reform in the corridors outside.

My own time with Nair is punctuated by anecdotes from his rich career in private banking. All delivered with a smile and an infectious laugh. "I have been in private banking for over 12 years in the region, based in Dubai," he tells me. And for Nair experience and familiarity with the Gulf market is critical to anyone's performance as a successful wealth manager for the expanding population of gilded elite.

2006 saw accelerated growth in the two key drivers of wealth creation, GDP and market capitalisation. This has underpinned the rise of the wealthy. According to the Merrill Lynch and Capgemini 2007 World Wealth Report high net worth individuals' (HNWIs) wealth totalled US$37.2 trillion in 2006. This marks an 11.4% gain on 2005 figures. HNWI financial wealth is expected to reach US$51.6 trillion by 2011, with an annual growth rate of 6.8%.

Part of this growth has been in the accumulation of wealth by the world's richest people - the so-called ultra-HNWIs. The assets of these individuals are valued at more than US$30m each, and their ranks are swelling. 2006 saw an 11.3% growth in the number of ultra-HNWIs bringing their number to 94,970. Their total wealth accumulation rose to US$13.1 trillion.

As a result one thing is certain: there is plenty of room for growth in the Middle East's wealth management market. According to the IMF, in 2006 individuals throughout the GCC had US$1.5 trillion held in real estate, offshore securities and bank deposits. The findings of the 2007 World Wealth Report show that in the Middle East total HNWI wealth grew by 11.7% in 2006.

Over the same period the HNWI population grew by 11.9%. Wealth is increasingly dispersed across the region, but the growing number of banks offering private wealth management services have yet to fully exploit the Gulf's potential.

One reason for this, according to Nair, is a lack of in-depth regional knowledge. The banking environment in the Gulf is "quite different from any other environment," he notes, and this "makes it quite challenging." It is meeting this challenge that has shaped the landscape of the wealth management industry in the region over the past decade. A fundamental change that Nair has seen is the decision made by offshore private banks to move to the Gulf region.

"10 years ago some banks had local representative offices here with very minimal skeleton staff, three or four people," Nair explains. Others were suitcase bankers who would visit the region once a quarter. Private bankers from London and Switzerland flew out, conducted business and flew home. According to Nair, "it was obvious that there was a slight disconnection."

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