By Dinesh Nair / Reuters
DUBAI: HSBC, Europe’s biggest lender, is significantly scaling down its private banking operations in the Middle East, two sources told Reuters, and HSBC said its top private banker in the region had been reassigned to London.
The private bank has shrunk the number of relationship managers to around 10 from 50-60 at its peak 18 months ago, one banking source familiar with the matter said. As many as 200 private bankers were employed by the bank in 2008 in the region, a second banking source added.
HSBC confirmed, as one of the sources had said, that Mark Stadler, HSBC’s global market head for the Middle East and Africa private bank since January 2011, had relocated to London.
He will be replaced by Sobhi Tabbara, who was previously Business Area Head for MENA and Saudi Arabia, a spokesman for HSBC in Dubai said in an emailed statement.
“We are not closing our private banking business in the Middle East, and it is not for sale. We have made a number of management changes across the private banking that mean that Mark Stadler has returned to the UK,” the statement said.
The move to downsize private banking operations in the Middle East is part of a push by the UK-headquartered lender to focus more on corporate and retail banking in the region and follows reviews of its Middle East business, the sources said.
“They have made a cautious decision to scale back private banking in the region and focus on the corporate and retail side. The cost base in the private banking is considerably higher and competition really intense,” the first banking source said.
“The Middle East is a key area for the bank, and there is more pressure to derive more profits from the region.”
HSBC, however, is not planning to fully close its private banking business in the region and may retain a small unit in Dubai, the source added.
Some other global banks have been beefing up their wealth management and private banking arms to cater to the region’s rich.
Last year, Swiss bank UBS poached Credit Agricole’s top Middle East and Africa investment banker Albert Momdjian for a senior job at its emerging markets wealth management division.
Coutts, the private banking arm of Royal Bank of Scotland and Bank of America Merrill Lynch have all beefed up their wealth management divisions recently.
The Gulf Arab region, which includes Saudi Arabia, Kuwait and the UAE, together pump a significant share of the world’s crude oil production, and global private banks have flocked to the region lured by the region’s growing ranks of millionaires.
The Middle East and Africa wealth management sector grew 8.6 percent in 2010 and overall assets under management could grow to $6.7 trillion by 2015 helped by high oil prices, a study by the Boston Consulting Group in June last year showed.
The region’s private banking sector has several pure-play private banks like Julius Baer and Sarasin Alpen, competing with diversified banks such as, J.P. Morgan Chase and UBS.