US lender says region's wealthiest families using institutions to shift more investments overseas amid oil price slump
Citigroup expects assets managed by its private banking business in the Middle East to grow by more than 20 percent this year as the region’s wealthiest families use institutions to shift more of their investments overseas amid the slump in oil prices.
The US lender, whose growth in assets under management in the Middle East was in the mid-20 percent range in 2015 and climbed by about 30 percent in the United Arab Emirates, anticipates a similar pace this year, according to Anthony Habis, head of Citigroup’s private banking in the UAE and Saudi Arabia and its global family office in the Middle East and North Africa.
That’s as high-net-worth clients move as much as a third of their fortunes into assets such as US and UK real estate, he said.
“We’ve seen a serious shift over the last six months,” Habis told reporters in Dubai Monday. “Bulge-bracket families are reconsidering their strategy. The client that traditionally allocated 5 to 10 percent to international markets is now looking at between 20 and 30 percent.”
Oil’s more than 70 percent plunge since June 2014 has prompted wealthy families in Gulf states, among the world’s biggest crude producers, to review how they manage their fortunes, creating opportunities for private banks. Even amid the decline in crude, the number of millionaires in Saudi Arabia is expected to increase by at least 70 percent over the next five years, Credit Suisse Group said in its annual wealth report in October.
Citigroup is “actively looking” to hire private bankers for its UAE operations and will continue to relocate staff to Dubai from London and Asia over the next 12 to 18 months as the Middle East’s financial hub attracts family offices and wealthy individuals, Habis said.
The Middle East is home to large family businesses such as Saudi Arabia’s Olayan Group, a major shareholder in Credit Suisse, and Dubai’s Majid Al Futtaim Holding, the operator of Carrefour stores in the region. Last year, Citigroup moved Mark Mills, a managing director and investment counselling head for Middle East and North Africa, and two other private bankers to Dubai from London.
“We are seeing more growth in wealth preservation and diversification of risk among clients at the moment,” Mills said at today’s event. “A key area of growth for us is when clients come to us saying they want to diversify their wealth internationally and ensure that the capital is preserved.”