Dubai: HSBC Private Banking, one of the largest global private banking organisations with $330 billion of total client assets under management sees significant opportunities for private banking business in the region, particularly in the GCC countries, Peter Boyles, Global CEO, HSBC Private Banking told Gulf News in a recent interview.
Significant growth in region’s private wealth combined with passing of wealth form one generation to another, Boyles expects private banks have a lot to do in the region. According to Boston Consulting Group’s Global Wealth 2017 report, wealth in the Middle East and Africa (MEA) region is projected to soar up to $12 trillion by 2021, 21 per cent of which will be contributed by the UAE, Oman and Saudi Arabia.
“In the coming years, we’ll continue to see wealth being passed from one generation to the next in the Middle East. To effectively support their clients, private banks will need to do at least three things. First, help clients put in place sound family governance structures that facilitate the transition of family wealth and businesses to the next generation. Second, assist in professionalising their family office functions. And third, identify strategic opportunities in the private and corporate world to deliver sustainable growth,” said Boyles.
HSBC Private Banking believes that with the global footprint and connections of HSBC Group, particularly in emerging markets and fast-growing economies is uniquely positioned in the Middle East to support the private banking needs of the region.
“There are only few banks that are well positioned to help private banking clients with international needs. Whether it is an IPO in China, the issuance of new Fixed Income instruments in Latin America, or real estate investments in Europe — these are all matters we have experience managing,” said Boyles.
Business owners and entrepreneurs often have personal financial needs that are intertwined with the requirements of the businesses they own or manage. The strategy of HSBC Private Banking involves providing private banking services to the principals and owners of the businesses banked by other entities of HSBC. “In this area we can leverage the proud commercial heritage of HSBC and the strength of our corporate, retail investment banking arms. We can help clients look into lending or corporate restructuring options, or provide them with access to co-investment opportunities, to name but two examples,” he said.
Risk diversification
Risk diversification, wealth preservation and succession planning are important priorities of the wealthy from the region. “We try to understand their financial objectives, their business, risk exposure, family situation and succession plans. This forms the basis of our proposals that encompass investment opportunities (e.g. real estate and privately owned companies) as well as non-financial objectives (e.g. private trust structures). The key, however, is to understand the unique situation of a client and their family and deliver bespoke solutions that match these needs,” said Boyles.
Given the structure of family enterprises in the Middle East, and particularly in the GCC, advice on governance is seen as very important by HSBC Private Bank as companies transcend generations and continue to develop. Many businesses in the region are owned by families, and continuity is a key concern for many of these families, as the owners approach the age of succession planning. In the GCC region, for example, about 90 per cent of all businesses are family owned with around 75 per cent of GCC regional businesses being at a point of transition from the founding generation to the generation of their successors, according to an article published recently by STEP Trust Quarterly Review.
“As more clients become aware of the need for family governance, the demand for this type of service is increasing, and innovative structures to help families successfully protect their capital, and pass assets through the family line, are being developed,” said Boyles.
In the UAE, for example, many of the family businesses are now transitioning from the first generation to the second. Founders of these businesses looking more intently for a solution, to ensure a smooth transition based on best practices. That is essential to ensure the longevity of these businesses and reduce the likelihood of conflict within the business among members of future generations.
Key Mena markets
Dubai: In the MENA region Saudi Arabia and UAE, is very important to HSBC Private Bank. The region is going through one of the most ambitious economic transformations in the world. This translates into huge investments in infrastructure; the creation of new cities, hotels, energy facilities and more potential for connectivity. The economic impact on wealth creation in MENA can only be positive.
“We believe the challenges in MENA are similar as elsewhere — and challenges are also opportunities. In MENA, there is not only strong wealth generation, but also a need for succession planning within families and across generations. This is a challenge — but also an opportunity for us to bring our offer into play as one of the biggest players in wealth planning,” said Boyles.
