Singapore: Private banks based in Singapore are aggressively expanding their wealth management operations in the Middle East as they aim to capture more clients in a relatively new market for Asian banks. What is of special interest to them is the significant Non-Resident Indian (NRI) segment of that market.
The International Migration Report 2017 published by the United Nations says that India has the largest diaspora population in the world, with 16.6 million Indians living outside the country of their birth. Other estimates have it as high as between 20 to 25 million. About 30 percent of NRIs reside in the Middle East, almost twice as many as those that live in the United States which has the second largest community.
With the number of people in the Middle East owning individual assets of more than US$500 million projected to grow by 28 percent to 500 in 2022 from 390 in 2017 according to the Knight Frank 2018 Wealth report, it is unsurprising therefore that banks see this region as an area for growth.
According to consultancy Capgemini, Dubai which manages 14 percent of overseas Indian wealth is the second-largest off-shore destination for Indian money. Singapore with 22 percent is number one and London is third at 13 percent.
Bank of Singapore (BOS), the eighth largest private bank in Asia (ex-China), based on assets under management, which opened its Dubai branch in February 2017 already has 45 wealth managers there. According to Vikram Malhotra, BOS global market head for South Asia and the Middle East, there has been a 20 percent year-on-year growth in the bank’s revenue from the region as of September 30.
BOS is the private banking subsidiary of Singapore’s Oversea-Chinese Banking Corporation (OCBC) which was
established after its acquisition of ING Asia Private Bank in January 2010.
BOS is planning to continue strategic hiring so as to expand their operations in its Dubai International Financial Centre (DIFC) branch in order to clinch more Middle Eastern and NRI clients. However, their hiring plans have been made more challenging due to other banks recruitment activities as competition for a share of the region’s growing wealth intensifies.
Another Singapore-based bank with Middle Eastern ambitions is Citi Private Bank. It has set a bold target of increasing its wealth management customer base by 18 percent in the United Arab Emirates in 2018 and by another 24 percent in 2019.
Citi, the second largest private bank in Asia aims to capture a significantly larger slice of the wealth-management business by capturing clients both from the global Indian diaspora and domestic Indian markets.
Jyrki Rauhio, South Asia head for Citi Private Bank was quoted by The Business Times (Singapore) as saying about NRIs, “They are investing in overseas assets such as commercial and residential real estate and are represented by family offices and family members in locations around the world, managing the family business and investing activities locally. They are the quintessential global citizens, requiring a global private bank like ours.”
Southeast Asia’s largest bank and also Asia’s sixth largest by assets under management, DBS Bank unveiled plans on November 27 to double the headcount for its private banking operations in Dubai by 2023. It first established its Dubai office in March 2006 as the first Singapore-based bank to receive a banking license at the DIFC.
It just expanded its premises in Dubai and said that it aims to triple revenue over the next five years. They will do this by targeting the region’s growing presence of ultra-high net worth (UHNW) and high net worth (HNW) individuals, family offices and sovereign wealth funds and by focusing on increasing client diversity, spread and penetration.
It aspires to position itself as a partner of choice for clients wishing to access the Asian market by catering to a growing wealth segment that looks towards Asia for investment opportunities.