Swiss bankers rely on tensions in the Middle East to attract wealthy customers seeking safety, political stability and discreet banks, according to a Bloomberg analysis. In the context of massive withdrawals made in recent years by Western customers, after authorities in countries like the United States and Germany have started a real war against tax evasion, the assets of clients in the Middle East and North Africa managed by Swiss banks increased by 14% last year, to 560 billion Swiss francs (more than 460 billion euros). Geneva became the largest offshore financial center for the rich people in the Middle East after King Fahd of Saudi Arabia built a palace in the city, as summer residence, 35 years ago.
Lombard Odier, the oldest private bank in Geneva, wants to double assets under management from clients in the Middle East to 10-15 billion Swiss francs over the next five years, said a representative of the financial institution for Bloomberg. “There is new money coming from the Middle East. The Arab Spring has created an instability in major Arab states which are eyeing Switzerland, as they did in the past 50 years,” says Bernard Droux, managing partner at Lombard Odier. Swiss banks are becoming increasingly dependent on Middle East, as their Western customers withdraw their assets, but an analysis of the Boston Consulting Group shows that Swiss banks will face a tougher competition in their effort to attract Arab money.
The more visible presence of people of Arab origin in the streets of Geneva announced the transformation of the city into a refuge for those weary of hot summers in the Persian Gulf. Nabil Jean Sab, a Swiss of Lebanese origin, head of wealth management bank Compagnie Privée de Conseils et d’Investissements, says that representatives of elites in the Middle East are attracted to Geneva by security, political stability and discreet banks. “When we begin to hear Arabic music on the streets of Geneva, we know that we will receive urgent requests to accept new customers. The Swiss brand is already well known,” says Sab. Most of the assets in Switzerland coming from the Middle East are in Geneva.
“While the most important families in the Gulf tend, for commercial banking, to resort to regional banks, their private wealth is preferably kept separate in offshore banks. They educate their children to schools in Geneva and appreciate the safety and discretion”, says Heiner Weber, head of a Geneva branch of Falcon Private Bank, an institution controlled by Aabar Investments, a company of Abu Dhabi government. Boston Consulting Group estimated the private fortune from Middle East at $4,500 billion.
But experts anticipate that rich customers from the Gulf region, will deal, in time, less with the Swiss banks, amid serious competition from Singapore and Hong Kong. The rival financial centers try to profit from the Swiss government’s decision to freeze the assets of former leaders of Tunisia, Egypt and Libya, whose regimes were overthrown by popular revolt last year. Meanwhile, passenger air traffic between Geneva and Middle East – North Africa area last year rose 14% to over one million passengers after the Emirates airline has opened a new route from Dubai.
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