x Abu Dhabi, UAESaturday 22 July 2017

Saxo Bank stamps footprint on Middle East's wealth business

Saxo Bank is seeking new clients in the Middle East, from blue-chip financial firms to family offices.

Saxo Bank is forging links with financial firms from banks to family companies as it triples the share of its revenues from the Middle East.

The Danish bank, which specialises in online trading and investments, will focus this year on more direct business with private investors in the high-net worth segment of the market, said Lars Christensen, the bank's chief executive.

"We've been seen as a retail business, but people maybe underestimate how many clients we have in the high-net worth category as well. This year a lot of the focus is on expanding our footprint in the very high-end trading segment."

Private wealth in the region took a beating during the financial crisis, as the Arabian Gulf's property crash and a collapse in equity markets hammered assets. Investors still bear many of the scars from that time, with some investors and families borrowing heavily to fund moves on financial markets in the hope of extravagant returns.

But financial scandals - including Bernard Madoff's US$85 billion (Dh312.21bn) Ponzi scheme - has left many investors feeling more comfortable striking out on their own rather than relying on advisers, Mr Christensen said. "There's little doubt that the industry as a whole has suffered a tremendous breakdown in trust."

Revenues from the Middle East have grown to 9 to 10 per cent of Saxo Bank's total since it established a local presence in May 2009, said Jakob Beck Thomsen, Saxo Bank's chief executive for the UAE. The share of revenues from the Middle East has tripled during that period.

The bank has noted a clear correlation throughout the world of increased sales whenever a new office is established, Mr Christensen said. Saxo is one of several companies that is moving a largely internet-heavy business model into the real world. This includes Google, which is said to have recently discussed plans for retail stores.

Saxo's breezy, open-plan office and Scandinavian furnishings mark a distinct contrast to the more staid interiors found elsewhere in the Dubai International Financial Centrebut it is seeking to build links with many firms located there.

The bank is seeking five partners in as many jurisdictions within the next three months, looking for "blue-chip financial institutions". But it is also joining a growing number of banks, such as Pictet and Société Générale, which are targeting investment vehicles of merchant trading families sometimes known as "family offices".

"Many of them work like a professional hedge fund," Mr Thomsen said. "Most of them have the same risk controls on what asset classes can they be expected to trade."

An Abu Dhabi office opening "could be of interest down the road" as Saxo grows its regional business, Mr Thomsen added.

However, stocks in the UAE will remain closed off to investors using the bank's trading services for the time being, with no plans to add the Emirates to its roster of countries, Mr Thomsen added. "We'd like to," he said. "It would be much easier if they [the UAE] decided to do the rational choice and merge the exchanges."

As it stands, the cost of integrating three separate exchanges into the business - and the low levels of liquidity across the UAE's three bourses - made it an unattractive option for Saxo.