Swiss private bank Julius Baer, which focuses on servicing high net worth individuals and independent asset managers, is considering establishing an office in Saudi Arabia, as it seeks to expand its franchise and target the largest concentration of wealth in the Middle East, the bank's CEO said.
"Our expansion has been almost everywhere except in Saudi. Over the next 12 to 24 months one of our key priorities will be Saudi," Boris Collardi, who has been chief executive of Julius Baer Group since 2009, said in an interview with Arabian Business. "If we get Saudi right we could double our franchise in the next five years."
The wealth manager, which has CHF200bn in assets under management, is considering opening an office in the kingdom as it views to tap the growing pool of prospective wealthy clients, said Collardi.
The overall wealth of high net worth individuals declined 1.7 percent across all regions in 2011, with the exception of the Middle East, according to the World Wealth Report 2012, released by RBC Wealth Management and Capgemini. However, despite the decline in investable wealth, the first since the 2008 financial crisis, to US$42 trillion, the global high net worth individual (HNWI) population grew marginally by 0.8 percent to 11m. In 2008, global HNWI wealth dropped by 19.5 percent.
During 2011, the United States, Japan and Germany accounted for 53.3 percent of global HNWI population. The previous year, these three nations represented 53.1 percent of the world's HNWI population.
As Switzerland comes under pressure over its banking secrecy regime from the US, UK and Germany, which want to crack down on tax evaders, Swiss banks like Julius Baer are looking to expand outside of their home markets. As part of its strategy to boost its presence globally, Julius Baer acquired last year the wealth management units of Merrill Lynch outside the US. The integration of Merrill will potentially increase Julius Baer's existing financial adviser base by as much as 64 percent.
"Overall growth, which has been a bit more subdued in the past two to three years and on the macro level has been shifting to new economies which have accelerated much faster than in the past," Collardi said. "That is what defines the strategy of a wealth management firm today, you need to follow where the growth of the money is. That's the reason why we're trying to ramp up our presence and expertise in different parts of the world."
Asia, which accounts for 60 percent of the world's population and about a quarter of billionaires globally, is the fastest growing region for the private banking industry, followed by Latin America, Europe and North America.
"In January 2006 we kicked off the new strategy of the group. At that time we thought Europe could not continue growing at the pace it was growing," Collardi said. "As we didn't have unlimited resources we had to decide where to focus and we decided to start with Asia. We built in Asia a fantastic franchise which is the fastest growing areas of our business. With the momentum of Asia we decided to embark on the Middle East, Africa, Eastern Europe and Latin America."
Until 2005, less than 15 percent of Julius Baer's clients were coming from the non-European and non-Swiss markets. The expansion of the bank has seen that portion increase to 37 percent, said Collardi, and with the Merrill integration is set to rise to 50 percent by 2015. That will means one in two of the bank's client assets will come from Asia, Middle East, Africa, Eastern Europe or Latin America.
The number of high net worth individuals in the Middle East increased 2.7 percent in 2011 year-on-year, while they grew about 5.4 percent in Latina America, 3.9 percent in Africa and 1.6 percent in the Asia Pacific region, according to the RBC Wealth Management and Capgemini report.
Emerging markets and developing economies are projected to grow about 5.6 percent this year, up from 5.3 percent last year, while Europe contracted 0.4 percent last year, and the US economy increased 2.2 percent, according to International Monetary Fund estimates.