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Falcon planning pensions for expats

Falcon Private Bank, a Swiss bank owned by Abu Dhabi's Aabar Investments, seeks to develop new business managing pension funds for UAE companies' expatriate employees.

Falcon Private Bank is developing pension schemes to manage retirement savings for expatriate workers in the UAE.

The Swiss bank is considering offering pension schemes for companies operating in the Emirates in a similar fashion to the 401(k) scheme in the US, where both companies and employees invest in a pool of assets overseen by external fund managers.

The bank is hoping to launch its pension management scheme within the next two to five years, said Eduardo Leemann, its chief executive. "It's something that's not very well known in the UAE. For us it's an opportunity, we want to be there and see what kind of share we can capture."

The bank's asset management unit, based in Zurich, has started trials managing a pension fund for expatriate staff at Chevron, the US oil giant, and is seeking to target other corporate customers wanting to provide pensions to their expatriate employees.

The launch marks a significant new strategy for the bank, which is fully owned by Abu Dhabi's Aabar Investments and usually targets ultra high net-worth individuals with a minimum wealth of at least US$5 million (Dh18.3m).

Expatriates account for 88.5 per cent of the UAE's population of 8.2 million, according to the National Bureau of Statistics. However, unlike some other countries, the Emirates does not provide a federal pension scheme.

Instead, companies are required to provide staff with end-of-service-benefits, also known as gratuities, a lump sum that is determined by the length of an employee's service.

In November, Dubai's Department of Economic Development said it was in the initial stages of exploring a federal pension scheme for expatriates both in the public and private sectors to replace gratuities.

Pensions providers and other lobby groups say such provisions represent unfunded liabilities and could be better managed externally by fund managers. Critics respond that such schemes shift the risk from the company to individual employees.

Towers Watson, the consultancy, said this month that the Middle East was experiencing rapid growth in numbers of international pension plans, with the region accounting for a third of all such plans created last year.

Although some UAE companies, such as Jumeirah Group, are exploring offering international pension plans, Falcon is one of the first locally-owned companies to seek to manage the retirement wealth of the UAE's expatriates.

Falcon Private Bank reported assets under management in the region rose about 10 per cent to $1.1bn since the start of the year, driven by increased business among UAE nationals.

The bank is expecting to add to its staff of 300 worldwide by about 10 per cent this year, with 10 or so people to be placed in the UAE.

As they gain new business other banks from the Emirates have poached staff leaving struggling European lenders.

Emirates NBD Private Banking has hired 15 staff in the past year, taking its workforce to 80, said Gary Dugan, the bank's chief investment officer.

Increased competitiveness from locally-owned banks has come alongside a withdrawal of some international players from a crowded private banking market in Dubai.

EFG International, a Swiss private bank, recently withdrew from the Middle East, closing its offices in Dubai and Abu Dhabi.

The future of Lloyds TSB's private bank has also been the subject of takeover speculation as part of the British bank's strategy to withdraw from many of its international markets.


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