Julius Baer is bullish on the Middle East as region outperforms global business

Exclusive: The Swiss private bank, with $442.7bn in assets under management, will open a new hub office in Qatar next month to boost presence in the region, chief executive says

Philipp Rickenbacher, chief executive Julius Baer. Chris Whiteoak / The National

Julius Baer, one of the oldest Swiss private banks, expects its Middle East business to strengthen as it prepares to open another hub office in Qatar to further boost its operations in the region, its chief executive has said.

While the new operation in Qatar, which has the fourth highest GDP per capita income of countries globally, will be a boon for Julius Baer, the UAE remains its biggest market in the Middle East and its fourth-largest worldwide globally in terms of clients and assets.

The bank has “clear growth plans” for its operations in the Arab world’s second largest economy, whose strong performance drove the region to outperform the Zurich-based wealth manager’s business elsewhere in the world, Philipp Rickenbacher, told The National in an interview.

The UAE economy expanded by 8.4 per cent in the first quarter of this year and is set to grow in 2022 at the fastest pace since 2011.

“This region has grown over-proportionately, in comparison to the global Julius Baer network,” he said. "We experienced very strong growth, especially with the help of Dubai.”

He declined to give the percentage of growth.

Julius Baer, which has 428 billion Swiss francs ($442.7bn) in assets under management, plans to begin its Doha operations in October. The move is part of the bank’s “hub strategy”, which from an advisory perspective, “gives us one more foot in the market here in the region”, it said.

“This addition has a lot of weight ... as we've been very cautious in extending our footprint," said Mr Rickenbacher, who took over the bank as chief executive in September 2019.

"It's the first opening of an advisory office in a country in my time as chief executive in the last few years.”

Julius Baer was among the first wealth managers to get a licence from the Dubai International Financial Centre in 2004. From a few employees almost two decades ago, it has grown to more than 140 employees, serving the region from its hub in the emirate. Qatar will add to its regional network of offices in Bahrain, Israel and South Africa and the UAE.

The bank is also bullish on the growth potential of Saudi Arabia, the biggest Arab economy and Opec’s top oil producer, which is set to reap $357bn in revenue this year.

The International Monetary Fund expects it to grow at the quickest pace in a decade and to be one of the world’s fastest-growing economies this year. The kingdom's economy is forecast to expand 8.7 per cent this year, according to Jadwa Investment.

“We are looking into that market and we have a clear vision on how to develop [it] with our specific footprint as a global wealth manager,” Mr Rickenbacher said.

The bank serves ultra-high-net-worth individuals and high-net-worth private clients, single and multi-family offices and intermediaries in the region.

HNWI are those who possess a net wealth of $1 million-$30m, while UHNWI clients have a net worth above $50 million.

The wealth creation – not only the “absolute level of wealth”, but also the intensity of the “ongoing wealth creation” is what makes Julius Baer bullish on the Middle East and Africa region’s business growth prospects.

“We don't have a crystal ball but here, Dubai is an excellent starting point for the next few years."

The region, he said, has positioned itself very well globally coming out of the pandemic, with strong business and economic fundamentals and social infrastructure for wealthy investors.

“I think a lot will happen here. I would foresee a strong growth potential, strong wealth creation potential here,” he said. “That's the reason why we keep investing here.”

Private banks and wealth managers are increasingly pushing to expand their presence in the Middle East, particularly in the oil-rich Gulf countries. Economies in the six-member economic bloc of the GCC have rebounded strongly amid rising oil prices that has further boosted wealth creation in the region.

The number of UHNWI in the GCC is expected to climb by 26 per cent in the next five years to over 9,100, while the tally for HNWI will jump by 12 per cent on average, the consultancy Knight Frank said in its Wealth Report in March.

About 57 per cent of those UNHWIs will be based in Saudi Arabia, while 23 per cent will be in the UAE.

Financial wealth in the UAE is growing at a compound annual rate of 6.7 per cent to reach $1 trillion in 2026, from $700bn last year, according to the Boston Consulting Group.

Dubai is the 23rd-most popular city in the world for ultra-wealthy residents, after the emirate recorded an 18 per cent increase in HNWIs in the first six months of 2022, to 67,900, New World Wealth, a research company that tracks wealth globally, and Henley & Partners said in a report earlier this month.

The number of billionaires in Dubai increased by one to 13 in 2022, while the city’s population of centimillionaires grew to 202 from 165 last year. The number of multimillionaires increased to 3,170 in June from 2,480 last year, the study found.

Capitalising on consistent wealth creation, DIFC has also set up a Global Family Business and Private Wealth Centre, as it looks to double its contribution to the emirate's economy by 2030. The move comes at a time when about Dh3.67tn in assets will be transferred to the next generation in the Middle East over the next decade.

“It's a very young region and a very dynamic region … [and] the fact [is] that this region has a very broad reach,” Mr Rickenbacher said.

“When I see cross connections, for example, into Africa or into the broader non-resident Indian community, even into India itself, which is also an important marker for us, I think, Dubai, the UAE the whole region has a reach that goes beyond just its national borders.”

The bank is pursuing an ambitious growth strategy, looking to more than double its asset base profitably within a decade and growing its business organically while also considering mergers and acquisitions.

“It is something that we look at globally,” he said with regards to possible mergers or acquisitions.

In 2012, Julius Baer bought Merrill Lynch's international wealth management business, boosting its scale.

The industry consolidation has come to a halt in the last three years globally, with no major deals. However, consolidation activity is expected to pick up pace in the coming years, he said.

“We are prepared to grow in our key markets, [organically and] also through M&A, and obviously that would include the UAE or the [broader] region, but the right targets will have to come [up],” he said.

Julius Baer’s AUMs declined 11 per cent in first half of this year, driven by the significant corrections in global equity and bond markets in what the bank described as one of the worst six-month periods for capital markets in decades.

The risk appetite of clients still has not bounced back to pre-pandemic levels as most investors are “waiting for clarity on the macroeconomic front," Mr Rickenbacher said.

“I think right now we're still in a situation where clients are invested on the one side, but are also keeping some powder dry for when it's more clear.”

Data currently does not suggest a high likelihood of a global recession next year, but even if there is a recession, the world economy has resilience to bounce back as quickly as it did from the pandemic-driven recession, he said.

“I am a professional optimist, and I believe that the resilience of the world is often underestimated and that we tend to focus on the negatives,” he said.

“I don't underestimate the recovery potential.”