Banks seek avenues into services for wealthy

The number of professionals seeking bespoke banking services is expected to grow in the Middle East this year, says a senior Barclays banker. Mark Elliot, a regional director of sales at Barclays, said growth in this segment in the Middle East was 8 per cent last year, the second-fastest growth rate in the world after Asia.

"What's terribly important from Barclays's perspective is developing our offerings in the mass-affluent segment so that we can participate in that fast-growing segment of the market." Definitions of the "mass affluent" label vary, with Barclays classifying the segment as anyone with more than US$9,000 (Dh35,000) worth of savings available to invest, although some consultants apply the term to customers with more than $1 million available.

Mr Elliot's outlook was supported at the MEED Middle East Retail Banking Conference in Abu Dhabi yesterday by other delegates who said they were devising ways to chase this lucrative market. Philip King, the head of retail banking at International Bank of Qatar, said: "If you don't do [wealth-management banking] in the right way, people like HSBC and Barclays Bank that have been in it for years are going to severely hurt your ability to succeed there."

Consultants said the recession had offered local banks a rare opportunity to break into this market. Sven-Olaf Vathje, the managing director of the Boston Consulting Group in Abu Dhabi, sees opportunities in the present difficult climate. "Many high-net-worth individuals from the Gulf region have not been satisfied with the performance of their wealth managers during the financial crisis," Mr Vathje said."They expected that their wealth managers - mostly from the traditional European locations - would protect their portfolios from market losses.

"While the traditional wealth managers have typically not lost mandates during the crisis, many of them have seen the inflow of fresh money dry up. Winners from the crisis are boutique wealth managers, as well as providers of alternative investment services and products. "Overseas banks still dominate the classical wealth management space. Given the long-term track record that many Swiss or British banks have in the field of wealth management, any shifts in market share will only happen in the longer run," Mr Vathje said.

ghunter@thenational.ae