Clariden Leu, a private bank in Switzerland, opened an asset management company in Dubai this month to service its clients in the region and oversee expansions in its banking business in the Middle East, Asia, Africa and Eastern Europe region. Mannan Adenwalla, Managing Director of the company in Dubai, estimates 68,000 millionaires are based in the Middle East region. He told Emirates Business there is high potential for expanding the bank’s operations in the Middle East, Asia, Africa and East Europe region through the company at the Dubai International Financial Centre (DIFC).
Why are you expanding into the Middle East?
We see the Middle East as one of the major wealth-creation markets worldwide due to high oil and commodities prices that have created high liquidity in the region. We opened Clariden Leu Asset Management Company in Dubai to be present in this market and serve our clients from here. Emerging markets, including China, India, the Middle East, Africa, East Europe and Latian America, are very active. Our company in Dubai will position us near our potential clients and close to the majority of these emerging markets. We will serve clients from the Middle East, Asia, Africa and Eastern Europe region.
Why did you choose Dubai for your regional business?
We set up the company here because we wanted to be present in an environment with dynamic economic growth. Our presence in Dubai allows us to strengthen our local know-how in the Middle East. Therefore, we can act faster and in a more personalised way in meeting the challenging needs of our clients. With the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, we see the country using its wealth and high income in establishing a very strong infrastructure for all economic activities. This also supports the banking sector. We see a lot of international companies, institutions and banks shifting essential sections of their operations to Dubai. Also the creation of a proper investment environment through the DIFC attracts international institutions to operate in the region.
What are your main areas of business?
Clariden Leu is a leading private bank in Switzerland that was created two years ago as a result of the merger of Credit Suisse’s four private banks including Clariden, Bank Leu, Bank Hofmann, and BGP Banca di Gestione Patrimoniale as well as the securities dealer Credit Suisse Fides. The banks had a long history of 250 years in Switzerland.
We have two major booking centres in Switzerland and Singapore and the new company in Dubai will offer services to our clients as a link between the region and our centres. We offer a very holistic approach to business in our three major banking services that include private banking, asset management and strong tailor-made structured products for individual clients. In fact, the last one is our major strength as we are operating on a teamwork-based approach for our clients. High net worth clients have different risk appetites and our team creates tailor-made structured portfolios according to the client’s risk appetite. Recent estimates showed there are more than 68,000 millionaires in the Middle East, especially in the GCC states.
Do you focus only on high net worth clients?
This is the essential part of our work here as the bank already has a long history of dealing with Middle Eastern clients. We have captured a very good stake of the market in the past and our penetration in the regional market and the reputation of the bank among high net worth clients is very good. These clients cannot be served through one manager because of sophisticated financial products in the markets.
A team of professionals is serving each client to meet his different demands and create his own structured portfolio. Clients benefit from an attractive range of wealth management services through a tailor-made investment strategy based on their individual needs.
The team and the management are critical for any growth in the business. So we created a strong team that can offer a dynamic and innovative product platform that comprises a broad range of investment funds, individual solutions for investment, and structured products for our clients.
The investment strategy team makes recommendations for the weighting of asset classes on the basis of forecasts for the world economy and global equity markets as well as for interest rates and currencies.
The equity and bond research team offers investment recommendations for specific stocks and bonds. We look for attractive investment opportunities not only in blue chip stocks but also in small-and mid-caps, which are often overlooked. The fund research team is responsible for selecting investment funds.
A lot of high net worth clients here search for Shariah-compliant products. What is Clariden Leu offering in this area?
At the current stage we do not have specific Shariah-compliant products. However, we do offer tailor-made Shariah-compliant portfolios for individuals according to their needs. The bank has long relations with clients from the region and we have had such portfolios for a long time for individual clients.
Islamic financing services are growing very fast in the region and internationally and some estimates talk about $500 billion (Dh1.83 trillion) worth of Islamic banking taking place in the region. We can introduce Shariah-compliant products but this will depend on the demand of our clients. We first study the market and according to our assessment we will decide whether to go in for new products.
What is the expected impact of slowdown in world economy on your business?
We see fears of recession in the US economy, slowdown in the European economy, but the emerging markets are growing very fast and the prospects of the overall world economy are good. The Middle East region, especially GCC countries, had low correlation with international markets in the past. But recently we are seeing increasing correlation due to the opening up of markets and increasing international investment coming to the region.
Regional stock markets, for example, will be affected by the slowdown in the international economy, but local economies are doing very well and this will minimise the impact of international trends. The region is enjoying a phase of high growth due to the rising prices of commodities and oil in particular. This has increased liquidity in the region. Fears of recession have impacted investors and we see a lot of investors with high cash positions waiting for the end of the sub-prime crisis to enter new investments.
Though regional investors are holding back, the current situation has high potential for investments because prices of stocks in international equity markets, especially in the US and European markets, have reached very attractive levels. Even the dollar is undervalued and this creates high potential for long-term investment.
The sub-prime crisis will influence international markets maybe until the end of 2008 or even early 2009 because a lot of banks are still disclosing new exposures to the crisis.
What is the impact of high inflation in the region on your potential expansion?
The high inflation rates are a negative part of the rapid growth. For example, Saudi Arabia reported last year its highest inflation rates in 25 years. Most regional currencies are pegged to the dollar and this also drives inflation higher. Depegging from the dollar is a sophisticated issue because oil is priced in dollars and most of the regional investments in international markets are estimated in dollars. The essential point is that the performance of regional economies is good enough to offset high prices due to inflationary pressures.
Clariden Leu Asset Management, Dubai
Mannan Adenwalla was appointed as Managing Director of Clariden Leu Asset Management (Dubai) as of December 2006. He has been a resident of Dubai for more than 20 years and his experience in the finance industry goes back to 1984. He started his career with Champaklal Investments, a merchant bank in Mumbai. Thereafter he joined the Bank of Credit and Commerce International, Mumbai, and was responsible for managing discretionary portfolios for Non-Resident Indians. He was then transferred to its Dubai office in 1988 with a mandate to build on the NRI business. Later, he joined Standard Chartered Bank to head the NRI initiative in the GCC with focus on the UAE, Oman and Kuwait. In 1997 he joined ABN AMRO Bank to head the Subcontinent group.
Clariden Leu sets up shop in the UAE