Swiss secrecy luring more Middle East investors
Crucial factors such as banking secrecy, diverse investment products and services have contributed to Switzerland remaining a premier offshore haven for the Middle Eastern investors, according to a leading Swiss-based asset manager specializing in the Middle Eastern region.
William Spencer, at WT Capital Management S.A, said: “We have seen an increase in demand for wealth management solutions from Middle East region, we have had a surge in requests for custodian services and tailored structured products in 2013 and expect year on year growth in 2014. We believe competitive pricing, enhanced return and a wider range of investments products give Swiss banking a significant edge over regional Middle Eastern banks.”
“We believe independent asset managers will continue to thrive in the Middle Eastern markets, as they are not biased or bound to any single financial institution, this enables them to coherently diversify asset allocation, reduce transactional and custody costs to increase returns for investors,” he added.
According to McKinsey Global Private Banking Survey 2013, the average revenue margin rose slightly in 2011, while the average cost margin fell by 5 bps as banks streamlined middle- and back-office operations.
About 70 percent of assets are still booked offshore though onshore competition is heating up. The Middle East remains an attractive growth market for private banking. Inflows continue to climb, and profitability is rising. However, competition among private banks is intensifying both among onshore and offshore operators. It said total Middle East wealth (onshore and offshore) grew to $2.2 trillion in 2012, up 18 per cent. The outlook for the region remains positive. It estimated that total High Net Worth (HNW) wealth will increase to $3.3 trillion by 2015.
Saudi Arabia accounts for about 40 percent of the total wealth pool in the GCC. It is followed by the UAE, Kuwait and Qatar (with about a 22 percent, 15 percent and 12 percent share of HNW wealth, respectively). The product mix for asset allocation has not significantly changed since 2011, but demand for collateralized lending solutions is growing.
The data also shows that most of the asset inflows have been in favor of cash and cash equivalent products (which represent about 54 percent of AUM). HNW and UHNW clients have maintained high liquidity onshore in order to take advantage of investment opportunities in the region, particularly in real estate.
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