November 2016 was a memorable time for Bank of Singapore. The US$124 billion wealth manager completed the acquisition of Barclays’ wealth business in Singapore and Hong Kong, and received regulatory approval to open a branch in the Dubai International Financial Centre (DIFC).
The US$320 million deal, which saw Bank of Singapore net US$13 billion in assets and 60 bankers, coincided with its plans to deepen its presence in the Middle East. The acquisition also included part of Barclays’ Dubai wealth management business.
The Singapore lender has been in Dubai since 1996 through a representative office based outside of the DIFC. Shortly after completing the acquisition, it opened a branch office at the DIFC in February 2017.
Vikram Malhotra, global market head, global South Asia and Middle East, recently sat down with Asia Private Banker to give an update of the Middle East business. “Since opening the Dubai office, we have been investing in the region, hiring local talent and building our technology infrastructure,” he said.
“Our AUM in the Middle East grew at a strong double digit CAGR from 2015 to 2021 and our bench strength has increased to over 100 since 2017.” Bank of Singapore does not disclose AUM breakdown by region.
Strong uptake in DPM
As the bank’s staff strength increased on the ground, so did its client coverage. While historically the bank’s client mix included non-resident Indians (NRIs) and non-resident Pakistanis, over the years they have been able to support the growth of Middle East clients in the Gulf Cooperation Council (GCC) countries.
“Our discretionary portfolio solutions have also seen super strong interest,” the ex-Barclays banker shared. “We had strong uptake in DPM with a high double-digit CAGR growth in the past six years.”
He attributes the growth to clients increasingly turning to the bank for guidance in their investments to navigate volatility. The bank continuously innovates to provide UAE-centric products to cater to the specific needs of Middle East clients.
Investors in the Middle East are home-biased, but they also look for global diversification, and ESG investment is gaining traction. Their appetite for UK commercial property and thematic products is rising.
Dubai is growing in importance as an international wealth hub (photo by ZQ Lee on Unsplash)
“We have clients who want to invest in the Middle East, but at the same time, clients in the Middle East who want to set up family offices in Singapore to help manage the family’s assets and investments. They are attracted in part to the city-state’s strong financial and legal infrastructure, and high quality of life,” Malhotra explained.
Flows from the rich
For Bank of Singapore, rapidly increasing connectivity between the Middle East, China and ASEAN means more opportunities to capture wealth and investment flows. Malhotra said China and India are among the largest investors in the Middle East real estate market and there are more than 600 Singapore companies present in the UAE.
“So I think with all this backdrop we are confident that our bank’s three hubs in Singapore, Dubai and Hong Kong are primed to serve Middle East clients pursuing the Asian growth story.”
He pointed out that the UAE has become a hotbed for migration flows from the rich across India and Europe. “If you look at the UAE population, more than 85% are expats and over 20% are NRIs. Policies like the Golden Visa and an integrated ecosystem are seeing more people set up structures or residences in the Middle East.”
Similarly, Kuwait, Qatar, Bahrain, Oman and Saudi Arabia are seeing a surge in investment migration interest linked to real estate investments, according to Henley & Partners, a citizenship advisory firm. It estimates there are about 4,000 multi-millionaires in the UAE with over US$10 million in assets.
The region is also attracting independent players to set up shop in Dubai. This year, Hong Kong-headquartered Tsang Group launched a single-family office, while UCAP Asset management, which has offices in Singapore and Hong Kong, received a Type 3C licence from the Dubai Financial Services Authority.
“There is a lot of wealth transfer happening in the Middle East to the next generation, especially to the women,” Malhotra said. “A study by the Boston Consulting Group found that women in the Middle East are projected to hold more than US$1 trillion of wealth by 2023.”
He signalled that local competition is brewing but having OCBC as its parent enables Bank of Singapore to leverage a lot of content, its network and connectivity. “People come to us for tailored investment advice and growth opportunities in Asia,” he added.
