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UAE and Saudi to remain key regional markets for wealth management

HSBC sees opportunities in succession planning and creation of governance structures

Gulf News

Dubai: The UAE and Saudi Arabia will be the key growth markets for HSBC Private Wealth in the region with prime focus on ultra-high net worth clients, said Franco Morra. HSBC’s Regional Head of Global Private Banking for Continental Europe and Mena.

The Middle East and North Africa (Mena) region is highly important to the bank, particularly Saudi Arabia and the UAE. The bank also has presences in Kuwait, Qatar, Bahrain and Oman. Overall, the Mena region is the third most important market for HSBC after Hong Kong/China and the UK.

“Mena has both challenges and opportunities. While the region is strong in wealth generation, it is in need for succession planning within families while establishing proper governance structures to pass wealth on to the next generation. This is a challenge but also an opportunity to bring our offer into play — we are one of the biggest players in wealth planning,” said Sobhi Tabbara, Global Market Head, Middle East, and North Africa, HSBC Global Private Banking.

Private banking is increasingly more than being purely about asset allocation. In the future the best private banks will be those which can help clients manage their full portfolios in the context of sustainable wealth creation, preservation and generational transfers.

“In addition to managing wealth, private banks will be helping clients grow their businesses or release value [through strategic acquisitions or IPOs], helping them protect value [generation planning] and guiding clients to put governance in place regarding how assets should be managed in the future,” said Tabbara.

Strong presence

The ability to link private banking clients to commercial and investment banking capabilities are becoming increasingly important. A strong presence across the globe will be important to clients, as this enables them to access international opportunities.

The emergence of a strong entrepreneurial class in the Middle East and North Africa region is supporting the strong wealth creation trend in the region. According to a recent research by HSBC Private Bank, the Middle East is home to the highest proportion of millennial entrepreneurs globally. The research among more than 2,800 active business owners, worth between $250,000 and $20 million (Dh917,500 and Dh73.4 million), finds that the Middle East also has the youngest average age of entrepreneurs at just 26 years old.

The journey to entrepreneurship begins for 46 per cent in the Middle East at school or college, which ranks the highest of any country or region. In the Middle East, around 63 per cent of entrepreneurs come from a business-owning family yet only 23 per cent of millennial entrepreneurs state they are shareholders or executives in the family business. Clearly this gives an opportunity for the bank to work closely with the new generation in their wealth creation and potential succession to the helm of family businesses.

HSBC does not see attempts by some of the regional private and institutional investors to develop in-house capabilities in wealth management. “With the overall wealth creation on the rise in the region, there is enough space for new entrants. Healthy competition offers choice for customers and gives HSBC and other players the opportunity to differentiate themselves even more through their products and services,” said Morra.

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