Abu Dhabi set to become international private banking heavyweight

Al Maryah financial free zone to power major development.

Powered by automated translation

The private banking business in this country is about to undergo a period of significant change, with the rise of Abu Dhabi as a force to be reckoned with on the regional and international scene.

Until now, international bankers and big local players have tended to congregate in Dubai, which with its infrastructure advantages has been seen as the hub of the private banking in the region.

In fact, some analysts thought there were too many private banks competing for business out of Dubai.

A recent survey by the research consultancy Insight Discovery identified about 60 private banks battling each other for increasingly sophisticated business, overwhelmingly from bases in Dubai.

“It is crowded. As is the case for financial services globally, downwards pressure on prices and margins must be the norm,” the survey found. That is about to change with the opening up of a new and potentially lucrative market in the capital.

The Abu Dhabi Global Market (ADGM), the financial free zone being set up on Al Maryah Island, has identified private banking, wealth and asset management as initial focuses in a centre that will eventually offer a full range of financial services to global investors.

Patrick Odier, like other private bankers, is aware of the potential attractions of the ADGM but is apparently wedded to Dubai, at least for the time being. “We don’t have enough information to make a final decision yet on where we should be based in the region.

“Dubai was the first place to put in the infrastructure we required and we regard the UAE as one nation with complementary financial hubs. But we shall study what it means for the business here.”

The ADGM has so far tended to look eastwards rather than to Switzerland for its cultural guidelines in financial services. Executives see the big financial centres in Hong Kong and Singapore, rather than Geneva or Zurich, as potential models for their development.

Both Asian cities have benefited as financial centres from the eastwards movement by high net-worth individuals, away from the newly-toughened regulatory regimes of America and Europe.

Singapore is forecast by the international accounting firm PwC to become world’s the biggest private banking hub in the near future.

Of crucial importance for the global industry – and for the UAE – is the question of where private banks book profits. Lombard Odier, despite its significant presence in Dubai, still tends to channel funds through Geneva, rather than this country.

“We don’t have the set-up at the moment to book profits through Dubai, plus we don’t want to compete with the local banks in this respect.

“This does not show a lack of trust but, rather, the fact we are offering a geographical alternative to investors. But there’s no reason the UAE should not become a safe booking centre,” says Mr Odier.


Follow The National's Business section on Twitter