Indosuez, the French wealth manager that has 112 billion euros of assets under management, remains in growth mode and is looking for further acquisitions as a wave of consolidations inspired by higher regulatory costs grip the private banking industry.
"We are, in general, in growth mode and we are looking [for private banking assets] in Asia, Europe, maybe the Middle East," Jean-Francois Deroche, Indosuez Wealth Management's chief executive officer for Middle East, Asia and Switzerland, said in an interview with The National at the bank's regional headquarters in Dubai.
"The private banking market is going through a transformation period because of the increase of regulation for both control of what's going on in terms of sanctions, money laundering and the other burden is linked to the safety of the financial system after the financial crisis. Those things have made costs increase dramatically for banks in the past 10 years."
Wealth in the Middle East grew at an average of 17.5 per cent a year from 2010 to 2014, doubling to US$2.2 trillion from $1.1tn, according to the consultants Strategy&. Almost half of the GCC’s wealth resides in Saudi Arabia. Together with the UAE the two countries controlled 74 per cent of the region’s wealth in 2013, compared with 71 per cent in 2009.
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Mr Deroche said he isn't targeting any specific size of private banking businesses to purchase. Its expansion drive comes at a time when many banks are ditching asset management arms to focus on core businesses. It's also looking to expand outside of Europe where the growth in wealth, especially in emerging markets, is growing at twice the rate, if not more. Whereas wealth in Europe is growing at a rate of between 2 per cent to 3 per cent, outside of Europe it is growing at between 5 per cent and 10 per cent.
The bank said on Tuesday it had reached an agreement to buy 67.7 per cent of Banca Leonardo in a deal with the Italian lender's main shareholders GBH ., Exor , Eurazeo, Swilux , and Torreal. That purchase will add 5.9bn euros of assets under management.
Earlier this year, Indosuez bought the Singapore and Hong Kong private banking businesses Credit Industriel & Commercial which will add about 4bn euros of assets under management, the executive said.
As for the Middle East, Mr Deroche said Indosuez is committed to the region having boosted the number of bankers in the region over the past year and a half by 20 per cent and it was especially bullish on the UAE, which has a more diversified economy than most of its regional peers. Other countries in the region are also growing despite several years of low oil prices.
Despite the uptick in wealth, the private banking market in the Middle East is very competitive. The number of banks chasing affluent clients is rising. There are more than 60 private banks operating in the Gulf, the majority of which are based in Dubai.
Swiss private banks especially are sprinting to the region. Recent fines for a number of banks in Switzerland have increased costs they may incur to ensure their compliance with rules and regulations. That has made many of them keen to tap growth in high-yielding emerging markets.
