Geneva lender bullish on growth in the Middle East

Banque Cantonale de Genève manages $500m to $800m in assets from the region, accounting for up to 4% of its global revenue

Blaise Goetschin, chief executive of Banque Cantonale de Genève, sees growth potential in the Middle East because of the way it handled the Covid-19 pandemic. Chris Whiteoak/ The National

Switzerland-based bank Banque Cantonale de Genève is confident of stable growth in the Middle East for the next five years despite the global economic uncertainty triggered by Covid-19. The 200-plus-year-old bank is not targeting exponential growth in the region as it follows a conservative approach to investment, its chief executive said.

“We were very happy with client growth in the past five years in the region,” Blaise Goetschin, chief executive of Banque Cantonale de Genève, told The National.

“I don’t expect an explosion in growth but rather a gradual improvement in the three business lines we focus on.”

The mid-sized bank deals in trade finance, correspondent banking and private banking. It has a representative office in Dubai since 2010 and another in Hong Kong to target clients in Asia.

BCGE, which globally manages $33.4 billion in assets as of the first half of this year, oversees $500 million to $800m in assets from the Middle East, Mr Goetschin said.

The Middle East accounts for 3 per cent to 4 per cent of the bank’s total revenue globally. Switzerland is its biggest market, followed by France. The Middle East and Asia account for BCGE’s biggest share of revenue among international markets, Mr Goetschin said.

“We see a lot of growth potential in the region because of how it handled the Covid-19 pandemic, the prevalent peaceful situation and acceptable taxation by international comparison,” he said.

The UAE’s financial wealth hit $600bn in 2020, undeterred by the Covid-19 pandemic’s financial effects, having grown at a compound annual rate of 3 per cent from 2015, according to a report by the Boston Consulting Group in August. Investable wealth accounted for about 69 per cent of it.

The UAE, where 51 per cent of the country’s wealth is owned by people whose net worth is more than $5m, represented 26 per cent of the GCC’s financial wealth in 2020, according to the consultancy. Wealth in the Emirates is expected to grow by a compound annual rate of 4 per cent to $700bn by 2025, according to its estimates. Meanwhile, total net wealth in the GCC is projected to reach $6.3 trillion by 2025, from $5.2tn in 2020.

BCGE, which aims to facilitate the flow of economic exchange between Geneva and the UAE, provides trade finance to commodity trading companies that deal in energy, metals and agro commodities in the Emirates and have operations in Switzerland.

Its correspondent banking team visits national banks in the UAE and co-ordinates between banks for monetary deposits, forex and other transactions. Meanwhile, its private banking arm focuses on Swiss nationals and other nationalities in the UAE who retain a part of their business in Switzerland for different purposes, such as to finance a house or business in their home country, the chief executive said.

“Globally, trade finance is most profitable for us. Correspondent banking also sees stable growth. But, there was a certain slowing due to the pandemic. Now, it’s recovering,” Mr Goetschin said.

“Our first priority in the region is the UAE. We are also interested in Oman, Saudi Arabia, parts of Iraq, Jordan and Egypt, which imports a lot of products like grain, wheat, coal, sugar and energy.”

On the investment front, BCGE eschews the cryptocurrency space and avoids taking on clients who prefer a more aggressive investment strategy, the chief executive said.

“We are sceptic of private non-legal cryptocurrencies. We recommend our clients not to invest in cryptocurrencies.”

The view of risk has not changed much after the pandemic, Mr Goetschin said.

“People continue to believe in stocks, which is the most interesting asset class. Bonds offer very low yield now. Private equity made a lot of progress in terms of acceptance.

“We took on a stable, consistent and methodological approach to the market. We diversified our portfolios and checked the stocks we invest in.”

Referring to interest in environmental, social and governance investing among clients, Mr Goetschin said the trend is just a communication exercise for the time being, involving a lot of activity with regulators.

“It is very complex to measure the impact of an investment product. We are a commercial bank, companies are making the transition, but it will take time. Don’t overpromise investors,” he said.

BCGE plans to consolidate its operations in the UAE for the time being, the chief executive said.

“We might add one or two people more every two years along with growth in the business. We aren’t targeting big acquisitions. Our first priority is client quality,” he said.

BCGE is optimistic of the global economic recovery, Mr Goetschin said, citing manageable inflation, low interest rates, peace and energy costs under control.

“The Middle East region is hedged against energy prices in the short term, has intelligence and workforce – all the perfect ingredients for success,” he said.