Citi private banking grows fast as clients diversify amid oil price decline

Citi’s private banking business in the Middle East is enjoying growth as high-net worth individuals shift strategy and expand their international portfolios amid the plunge in oil prices, bank officials said on Monday.

Citi’s private banking assets under management and revenue in the Middle East grew more than 20 per cent last year compared with a year earlier, with the UAE registering 30 per cent growth as family offices set up base in the country.

“We have seen particularly the high net worth institutional families reconsider their strategies,” said Anthony Habis, the global family office head in Mena at Citi Private Bank.

“The core continues to be their operating business in the region. They are starting to think now maybe the satellite, the international pieces need to be a lot more than 5 or 10 per cent or 20 per cent.”

Citi’s private banking team in the region could grow over the next 12 to 18 months depending on clients’ needs, he added.

Household wealth in the Middle East and North Africa slid 2.2 per cent to US$4.4 trillion in mid-2015 from the year-earlier period as the oil price plunge trimmed wealth, according to an October report by the Swiss private bank Credit Suisse. Despite the drop in wealth creation, the number of millionaires in the region is expected to grow by more than half in the next five years, the report said.

Citi Private Bank clients in the region are seeking to diversify and invest in less risky assets as they look to offset the oil price rout hitting regional economies.

“They [private banking clients] are less concerned about the performance of those portfolios, but more concerned about having them sit in the right structure and insulated from the local environment,” said Mr Habis.

Clients in the region are also favouring investments in real estate, particularly in the US, as they provide better yields than fixed income thanks to the still low interest rate environment.

Citi is advising its clients to stick to US, European and Japanese equities and to be selective in their fixed income investments despite the recent global turmoil and volatility in equities.

The US economy will be the key driver of global growth, with an expected increase in corporate earnings, said Jeffrey Sacks, the Europe, Middle East and Africa capital markets strategist at Citi Private Bank.

“European equities have got decent earnings growth potential,” said Mr Sacks. “There are several drivers for that – low rates, low oil price driving private consumption and a weak euro that is supporting exporters.”

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