Strategy

Swiss Bank Confident Of Asset Growth In Middle East - Report

Tom Burroughes, Group Editor, London, 3 November 2014

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Switzerland-listed Julius Baer is taking a bet that stronger economic growth in the Middle East will enable the bank to expand its assets, a report says.

Switzerland-listed Julius Baer is taking a bet that stronger economic growth in the Middle East will enable the bank to expand its assets, according to The National.

In an article on Saturday, the publication quoted Remy Bersier, a member of the bank’s executive board as saying: “There is wealth creation here. It’s growing at a fast rate, not just in the oil and gas sector but also non-oil orientated sectors are going to grow by 5 per cent GDP. There is potential, there is business. It’s almost as fast as Asian growth.”

“If you look at the forecast of the region, a lot of wealth generation will continue here with all the related activities around Expo 2020, the Fifa World Cup in the region but you still have a lot of wealth creation in countries like Kuwait, Oman and Saudi Arabia,” he is quoted as saying.

A number of banks have, as the report said, pushed into the region, such as by setting up offices in the DIFC in the past 18 months. Firms such as Falcon Private Bank, the Swiss money manager owned by Abu Dhabi, are beefing up their capabilities there, it said, noting that there are 58 private banks operating in the region, with the majority based in Dubai.

Investment
In recent years, with low global interest rates, Middle East investors are increasingly adding equities to their portfolios, the report quoted Bersia as saying.

“I remember my first trips to the Middle East 25 years ago, investments abroad were mainly real estate investments,” he said. “They were buying hotels or real estate in London. They were reluctant to make investments in equities in Europe where now they have entered slowly, but now you see more appetite for diversification. Private investors were reluctant. They were considering local shares to start with and shorter investments and fixed income,” he said.

“And now that fixed income return is close to zero, they have started to consider diversification. They are considering more and more the diversification into equities in the last three to five years.”

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