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Give us a brief about UBP’s presence in the Middle East. How has been its growth over the years?
We have been present in the region since 2005 when we first set up our representative office in Dubai. Our core business activity has been institutional hedge fund sales. In 2009-10, we opened our DIFC office in Dubai from where we started offering private banking services. Since beginning, we’ve been covering the Middle East region out of our head office in Geneva and through London offices.
We’ve been expanding and the Middle East has been one of our core target markets globally for many years. In the last five years, we’ve grown our business in the region substantially and have doubled our assets under management that is now almost Swiss Francs (CHF) 12 billion. UBP’s total assets under management globally is CHF 100 billion, out of which the Middle East’s share is almost 12%. The region is now the fastest growing market for us globally. Within the Middle East, GCC and North Africa are high growth markets in the region.
One of the biggest worries this year has been the collapse in the crude oil price and the overall softening of commodity prices. Do you see the looming danger of deflation around the world?
I think the volatility in oil prices is natural, and the one this region is used to for a long time. So we don’t see it as a deflationary risk. On the contrary, this region has by far defied the global economic slowdown and the economies in the region have been doing relatively better compared to other parts in the world. Going forward, we still see a lot of growth prospects and a lot of wealth creation in the region both by the nationals as well as by the foreigners moving in. The two regions in the world which offer us the best growth potential is Asia and the Middle East.
Given that high net worth and ultra-high net worth investors are risk-averse due to the global economic slowdown, how are you looking to realign the wealth management strategy for your clients going forward?
Our wealth management strategy is intact as we know what exactly our ultra-high net worth clients need and this has been reflected in our performance. Our business is growing while other players in the business are exiting the offshore private banking business market. That shows our commitment to this region. Our strategy has paid us back in terms of our growth in assets under management in the region as well as in terms of the number of clients which is expanding significantly.
Do you see the risk perception of your clients in this region any different from those in other parts of the world?
No, the pattern is the same. High net worth individuals usually take the risk in their home countries because they understand well the domestic risks. We understand this and accordingly help them achieve their goals.
Are you being more tactical now looking for short term investment objectives than committing for long term?
We look for both the short-term and long-term strategies. It all depends basically on the needs of our clients. That’s why we invest a lot in our people our Relationship Managers (RMs). One of the good things about UBP is that the average duration RMs are with us is long, around 13 years, probably the highest in this business. We don’t face a lot of churning issues unlike other private banks in the business which hire and fire RMs frequently.
How the agreement with the recent acquisition of the overseas operations of Coutts from the Royal Bank of Scotland (RBS) is going to serve your business objective?
Our assets under management is CHF 100 billion while that of Coutts International is around CHF 30 billion. So the acquisition will grow our business by 30% straight. Going forward, we’ll continue to focus on growth, both organically as well as through acquisitions in this region.
What opportunities do you see in the Gulf’s private banking sector? What differentiates UBP in the Gulf?
We believe the region will continue to grow. More excitingly, it will offer us better opportunities as some players are exiting the business. This is a good sign for banks like us.
One of the biggest challenges private bankers face is attracting and retaining clients. How has been your experience in this regard?
The numbers speak for themselves. We’ve been very successful as we’ve been following the right approach by not over-expanding. But at the same time we’ve been very opportunistic and have an entrepreneurial spirit. UBP is a family-owned bank and our core business is private banking and asset management that make us focused on doing well what we do.
What are the major challenges for private banking in this region?
Competition to attract clients will continue, but we look at it more as an opportunity than as a challenge. The ones that are focused and have private banking as their core business will be able to survive. Challenges are more for those players who try to do too many things in the region, of which private banking is one of them.