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Global banks still wary of Middle East

Western banks are keen to expand their operations in the Middle East, but are still concerned about the regulatory environment and political instability in the region, according to a report issued today.

More than 80% of respondents told the Economist Intelligence Unit (EIU) that they expect to increase their investment in the region over the next three years.
However, 71% of those surveyed had significant concerns about the geopolitical environment in the Middle East, and 65% said that a lack of transparency and poor regulatory standards were deterrents to investment.

The survey is part of ‘Asset management in the Middle East: The prospects for global financial institutions', a newly-released EIU report sponsored by the Qatar Financial Centre (QFC) Authority.

"There is a strong appetite among global financial institutions to invest in the asset management sector in the Middle East," said Rob Mitchell, editor of the report.

"High levels of wealth are fuelling strong demand for private banking and wealth management services, while greater maturity among investors and a more robust financial infrastructure are encouraging the development of the retail investment sector.

"But despite these opportunities, a number of problems persist that are deterring further investment, including a lack of transparency, concerns about the regulatory environment and difficulties recruiting skilled finance professionals in the region."

The survey asked 180 senior executives from financial services firms for their views on the business environment for asset management in the Middle East.

Almost 60% of respondents said that they expected a substantial increase in demand for Islamic finance products over the next three years, and a growing proportion of respondents said that they expected at least some of their products to be Shariah compliant. Private banking was seen as the strongest investment opportunity.

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