This publication interviews the Middle East and Africa CEO of Banque Internationale à Luxembourg.

Building client relationships in the Gulf region of the Middle East requires time and patience given the need to build trust among wealthy individuals and their families in such a market. And the regional chief executive of Banque Internationale à Luxembourg has particular expertise when it comes to working for the long haul.

This publication recently interviewed Eddy Abramo in Dubai. He has been at BIL since 2014. Prior to joining the bank, he worked for more than 20 years at Societe Generale.

One of the opportunities for a firm such as BIL in the Gulf Co-operation Council (GCC) sector of the Middle East is that private banking is still, to some degree, a new business model for the local banks in the region, while BIL is far older than jurisdictions such as the United Arab Emirates (BIL was founded in 1856).

“What is very important for me in Dubai is the know-how of a very old, Luxembourg-based private bank and backed up by Arabic support,” Abramo said.

“Usually, the big European banks have a lot of expertise already existing at the head office level. So locally, the front office team has to leverage this expertise. It could work for some topics like wealth planning, structured products or real estate financing in Europe but it is not efficient when you have to deal with local needs on local products,” he said. "You need to leverage expertise in Europe but also think locally because even if our clients are global, they are based in the GCC and their risk sensitivity and their needs are different compared to European-based clients."

Abramo’s comments come at a time when BIL has been recalibrating its business footprint. Last May, for example, it announced it was closing its operations in Singapore for strategic reasons as part of an overall review of its business. The firm had begun operations in the Asian city in 1992. On the other side of the ledger, in 2014, BIL opened its first office in the United Arab Emirates, with Abramo at the helm.

Economic performance for the group has been broadly robust. According to full-year results for 2015, net income rose 10 per cent year-on-year to €134 million from €122 million in 2014 and assets under management rose 15.2 per cent to €35.5 billion. The bank now operates in Luxembourg, Switzerland, Denmark and the Middle East.

Competition
Abramo pointed out that in the local Dubai market alone, BIL is up against a large range of banks and other wealth managers. The Dubai International Financial Centre, for example, hosts more than 400 financial institutions.

At present, Dubai is not a booking centre for BIL – the firm has a licence category four and it leverages Luxembourg or Switzerland as a booking centre. It is licensed by DIFC to conduct the financial services of arranging credit or deals in investments, advising on financial products or credit and arranging custody.

What is it like to do business in Dubai? As far as Abramo is concerned, Dubai is the “Switzerland of the GCC. It is very safe and very well organised...90 per cent of those here are foreign nationals,” he continued.

How does the firm work these days? “15 years ago, each relationship manager used to work like a one-man show. He did everything from the advisory to the investment proposal, tax advice and so on...Today, it is not possible at all. Our clients’ needs are so specific, we have to be perfectly aware about the rules of each country especially in this part of the world where the clients are what I used to say 'glocal'. They are based locally with a global exposure. So today, relationship managers at BIL are like conductors of an orchestra, giving clients access to a range of expertise at the bank and managing the global relationship with each client,” he said.

Challenges
WealthBriefing asked Abramo about some of the headwinds seen this year, such as the weaker oil price and its impact in a region so reliant on energy revenues. 

“The geopolitical situation of the GCC and the volatility on the oil price are two main challenges for 2016. We can also add the opening of Iran [lifting of international sanctions] which will be a new challenge for the region in term of competition (in the oil industry). Even if the local markets offer a huge potential in term of growth compared to the other markets especially in Europe, obviously it will not be de-correlated from the local situation,” Abramo said.

In terms of what he thinks has changed the most in private banking during his career so far, Abramo said the rise in regulation has been a big change.

“Today, only the financial institutions with a strong DNA in term of risk and compliance are able to conduct in a good way the PB business,” he said.

As far as targets are concerned, Abramo did not give specific figures, but noted that the business strategy is for the long term, with a desire to increase local market share, as well as breaking even.

With global interest rates so low and returns modest from certain asset classes, Abramo said the bank has a value-add proposition to the extent that, even if the environment is a low-yield one, there are opportunities in providing global expertise on the markets.

“Globally the markets are difficult for the time being so first our clients are looking for low volatility exposure. Also due to the low European interest rates, real estate in Europe can offer good yields and can be interesting for some [clients],” he said.