Banque Internationale à Luxembourg (BIL) yesterday became the latest private bank to open its doors at the Dubai International Financial Centre as it looks to tap the growing wealth in the region.
Undettered by the stiff competition for wealth management in Dubai, the bank is betting that Luxembourg’s high credit ratings and political stability will help it to attract clients from a turbulent part of the world.
François Pauly, the bank’s chairman, and Hugues Delcourt, its chief executive, said in Dubai that the 158-year-old lender is aiming to source between 5 and 10 per cent of its €30 billion (Dh139.73bn) of assets under management from the Middle East in a couple of years.
Currently less than 5 per cent of the bank’s assets come from the region, they said.
“It’s a great honour for BIL to be the first bank from Luxembourg to put its root down here in the DIFC and thus aims to be able to benefit from the appeal of such a development platform in a region undergoing spectacular growth,” Mr Pauly said.
“The DIFC is an undeniable strategic centre as a getaway between Asia and Europe and offers a unique legislative and legal framework, making it an optimum environment and an ideal location for BIL’s expansion in the Middle East.” Private banks including Swissquote and La Cloche Wealth Management have opened doors at the DIFC in the past year-and-a-half. Others such as Falcon Private Bank, the Swiss money manager owned by Abu Dhabi, are beefing up their capabilities here while shuttering offices in Hong Kong to focus on the super-rich in the Middle East, Africa and eastern Europe.
There are about 58 private banks operating in the region, with the majority based in Dubai, according to Insight Discovery, a UAE-based consultancy.
These banks are honing in on Dubai because the Arabian Gulf is among the best-performing economies in a world struggling to boost GDP in the aftermath of the 2008 financial crisis.
In the Middle East and Africa alone, private wealth increased 11.6 per cent to US$5.2 trillion last year, according to a report from Boston Consulting. That came amid a rebound in regional economies triggered by increased government spending on infrastructure projects and buoyant oil prices. As a result, economies in the Gulf grew by more than 4 per cent last year.
The grand duchy has had links to the region with an office in Bahrain, which it has closed down in favour of its presence in Dubai. It has also been active in Islamic finance. Last month Luxembourg sold a €200 million sukuk with a five-year maturity, following a number of international governments and banks, including Goldman Sachs to sell Islamic debt to tap the Middle East’s cash. Luxembourg is the largest hub for Islamic funds in Europe and the third largest worldwide after Malaysia and Saudi Arabia, BIL said.
“The interest for our sukuk was quite large, it was oversubscribed and we were able to collect investments from the Middle East, mainly from the Middle East I must say, but also from other areas such as Asia and Europe,” said Pierre Gramegna, Luxembourg’s finance minister, who also attended the conference. “The yield was extremely low, due to the fact that it was in euro and due to the fact that Luxembourg is a triple AAA country.
“All my interlocutors have asked me about it and have asked me if we are envisaging to issue further ones in the future, to which I answered that we are looking into the possibility of doing that quite keenly,” he added. “There seems to be a large appetite for sukuk all over the world.”
mkassem@thenational.ae
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