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Insight Report: Business Strategies for Targeting HNWIs in the Middle East

© WealthInsight | This report is a licensed product and is not to be photocopied. 0

Publication date: March 2015

Report code: WI0018FR

www.wealthinsight.com

Insight Report: Business

Strategies for Targeting

HNWIs and UHNWIs in the

Middle East

Beijing • Buenos Aires • Frankfurt • Hong Kong • Hyderabad • London • Madrid • Mexico City • New York • San Francisco • Seoul • Shanghai • Singapore • Sydney

Insight Report: Business Strategies for Targeting HNWIs in the Middle East

© WealthInsight | This report is a licensed product and is not to be photocopied. 1

About WealthInsight

The WealthInsight Intelligence Center Database is an unparalleled resource, and the leading

database of its kind. Compiled and curated by a team of expert research specialists, the database

comprises dossiers on over 120,000 HNWIs from around the world.

The Intelligence Center also includes tracking of wealth and liquidity events as they happen, and

detailed profiles of major private banks, wealth managers and family offices in each market.

With the database as the foundation for its research and analysis, WealthInsight is able to obtain an

unsurpassed level of granularity, insight and authority on the HNWI and wealth management universe

in each of the countries and regions it covers.

Insight Report: Business Strategies for Targeting HNWIs in the Middle East

© WealthInsight | This report is a licensed product and is not to be photocopied. 2

Synopsis:

This report provides insights into the complex needs of the Middle Eastern HNWIs and UHNWIs as

well as providing an in-depth analysis on the attitudes of international and domestic wealth managers

and private banks towards business strategies to target the Middle Eastern HNWIs and UHNWIs. The

reports also analyses market size of the Middle Eastern HNWIs and UHNWIs and highlights specific

business strategies to target such important clients by looking at expansion strategy, client strategy

and marketing strategy. It uses WealthInsight’s proprietary HNWI database comprising over 120,000

individuals. The report covers the following areas:

Attitudes of wealth mangers and private banks to targeting Middle Eastern HNWIs and

UHNWIs.

Snapshot of the Middle Eastern HNWI and UHNWI markets including market size, and key

forecast markets trends; drivers and barriers of the wealthy Middle Easterners market and key

regulatory issues.

The markets covered include the UAE, Saudi Arabia, Kuwait, Qatar, Oman and Bahrain.

Key financial products and services offerings in the Middle East Markets and the role of family

office in managing wealth of the Middle Eastern HNWIs and UHNWIs.

Reasons to buy (how and why does the reader benefit from this report):

Understand the complex needs of Middle Eastern HNWIs and UHNWIs, and know how best

to target them.

Make robust business decisions and build better business strategies in most important

business areas such as expansion strategy, client strategy and marketing strategy to target

Middle Eastern HNWIs and UHNWIs more effectively.

Be informed about key market trends in financial products and services offerings in the GCC

countries, and address each trend accordingly.

Be aware of attitudes of wealth managers and private bankers towards the future outlook of

business strategies in order to target Middle Eastern HNWIs and UHNWIs.

Insight Report: Business Strategies for Targeting HNWIs in the Middle East

© WealthInsight | This report is a licensed product and is not to be photocopied. 3

4.2 The Gulf’s HNWIs and UHNWIs Market Size and Key Market Trends The HNWI and UHNWI populations and wealth grew significantly during the review period, and are

projected to grow further, although at lower rates, over the forecast period. The UAE, Saudi Arabia,

Kuwait and Qatar account for more significant proportions of HNWIs than other Middle Eastern

markets such as Iran, Iraq and Jordan.

There were around xxx HNWIs in the UAE in xxx, followed by Saudi Arabia with around xxx, Kuwait

with xxx, and around xxx in Qatar. Oman and Bahrain, being smaller economies with lower

populations, had lower HNWI populations. These markets are, however, expected to grow further

over the forecast period, which will ultimately drive their HNWI populations. A brief overview of the

HNWI population in Middle Eastern markets in presented in the following table.

Table 1: HNWI Populations in the Middle East, 2010–2019

HNWI Population – Review 2010 2011 2012 2013 2014 CAGR 2010–2014

UAE Xxx Xxx Xxx Xxx Xxx xx%

Saudi Arabia Xxx Xxx Xxx Xxx Xxx xx%

Kuwait Xxx Xxx Xxx Xxx Xxx xx%

Qatar Xxx Xxx Xxx Xxx Xxx xx%

Oman Xxx Xxx Xxx Xxx Xxx xx%

Bahrain Xxx Xxx Xxx Xxx Xxx xx%

Total Xxx Xxx Xxx Xxx Xxx

xx%

HNWI Population – Forecast 2015 2016 2017 2018 2019 CAGR 2015–2019

UAE Xxx Xxx Xxx Xxx Xxx xx%

Saudi Arabia Xxx Xxx Xxx Xxx Xxx xx%

Kuwait Xxx Xxx Xxx Xxx Xxx xx%

Qatar Xxx Xxx Xxx Xxx Xxx xx%

Oman Xxx Xxx Xxx Xxx Xxx xx%

Bahrain Xxx Xxx Xxx Xxx Xxx xx%

Total Xxx Xxx Xxx Xxx Xxx xx%

Source: WealthInsight database © WealthInsight

In line with the growing HNWI and UHNWI populations in the Middle East, the Gulf region is also

recording significant growth in HNWI wealth. In xxx, HNWIs in the UAE and Saudi Arabia combined

held more than US$ xxx billion in wealth, a figure that is expected to exceed US$ xxx billion by 20xx.

Similarly, combined HNWI wealth in Kuwait and Qatar is expected to grow from US xxx billion in 20xx

to around US$ xxx billion by 20xx. Oman and Bahrain are also expected to record significant growth

in HNWI wealth over the forecast period. An overview of HNWI wealth in the Middle East is presented

in the table below.

Insight Report: Business Strategies for Targeting HNWIs in the Middle East

© WealthInsight | This report is a licensed product and is not to be photocopied. 4

HNWIs by age group

The Gulf’s HNWI population grew during the review period, and is expected to grow further over the

forecast period. There are, however, significant variations in the ages of the HNWI populations in the

GCC countries. While around xx% of the HNWI population in Bahrain was aged above xx years in

20xx, only around xx% of HNWIs in the UAE were in this age bracket. In the same year, more than

xx% of the HNWI populations of Kuwait and Oman were aged over xx years.

In Qatar, around xx% of the HNWI population was below the age of xx years in 20xx, while xx% was

aged over xx years. The xx–xx years age group was the single largest age bracket in Qatar,

accounting for xx% of its total HNWI population.

Saudi Arabia and the UAE have relatively young HNWI populations. Almost xx% of HNWIs in Saudi

Arabia are below the age of xx years, and in the UAE this age bracket accounts for almost xx% of the

HNWI population. The significant differences in HNWI age dynamics in the Middle East provide

growth opportunities for wealth managers to diversify their product and service offerings according to

clients’ needs, rather than offering one-size-fits-all products.

Figure 1: HNWI Populations by Age Group, 20xx

Note: The analysis is based on in-house database of HNWIs

Source: WealthInsight HNWI database © WealthInsight

0%

20%

40%

60%

80%

100%

UAE Saudi Arabia Qatar Oman Kuwait Bahrain

40 & Below 41 - 50 51 - 60 61 - 70 71 & Above

Insight Report: Business Strategies for Targeting HNWIs in the Middle East

© WealthInsight | This report is a licensed product and is not to be photocopied. 5

Methodology

WealthInsight’s teams of in-house analysts devise and collect data over a historical period of five

years, and develop forecasts for a five-year forecast period. All WealthInsight wealth reports are

rigorously sourced and created according to a comprehensive methodological process:

Internal audit

Review of in-house databases to gather existing data:

Historic market databases and reports

HNWI Database

Wealth management, private bank and family office database

Financial deals and news archive

Secondary research

Collection of the latest market-specific data from a wide variety of industry sources:

Government statistics

Industry associations

Company filings

Broker reports

International organizations

Primary research

Review of the latest wealth management and private banking industry trends

Surveys using panels compiled from across the wealth sector:

Wealth management and private banking professionals

Financial services experts

HNWIs

Expert opinion

Collation of opinion taken from WealthInsight interviews of leading industry experts

Analysis of third-party opinion and forecasts:

Broker reports

Industry associations

Wealth management and private banking media

Official government sources

Leading academic research and commentary

Data consolidation and verification

Consolidation of data and opinion to create historical datasets

Creation of models to benchmark data across sectors, asset classes and geographies

Insight Report: Business Strategies for Targeting HNWIs in the Middle East

© WealthInsight | This report is a licensed product and is not to be photocopied. 6

Market forecasts

Feed of forecast data into market models:

Macroeconomic indicators

Industry-specific drivers

Analysis of the WealthInsight HNWI Database and Wealth sector company databases

to identify key trends:

Latest wealth trends

Key drivers of the wealth management industry

Report writing

Analysis of market data

Discussion of company and industry trends and issues

Integration of survey results

Annual review of financial deals and wealth management trends

Standardization of market definitions using recognized industry classifications

Quality control

Peer review

Senior-level QC

Random spot checks on data integrity

Benchmark checks across databases

Market data cross-checked for consistency with accumulated data from:

Internal databases

Company filings

Insight Report: Business Strategies for Targeting HNWIs in the Middle East

© WealthInsight | This report is a licensed product and is not to be photocopied. 7

TABLE OF CONTENTS

LIST OF TABLES ...................................................................................................... 3

1 Introduction ........................................................................................................ 5

1.1 What is this Report About? ..................................................................................................... 5

1.2 Definitions and Scope ............................................................................................................. 6

2 Executive Summary ........................................................................................... 7

3 Attitudes of Wealth Managers and Private Banks to Targeting Middle

Eastern HNWIs and UHNWIs ................................................................................... 9

4 Snapshot of the Middle Eastern HNWI and UHNWI Markets ........................ 14

4.1 A Comparison of Business Strategies for Targeting HNWIs and UHNWIs in the Middle East

15

4.2 The Gulf’s HNWIs and UHNWIs Market Size and Key Market Trends................................. 17

4.3 HNWI and UHNWI Demographic Trends .............................................................................. 21

4.4 Drivers and Barriers of the HNWI and UHNWI Markets ....................................................... 26

4.4.1 Drivers ........................................................................................................................... 26

4.4.2 Barriers .......................................................................................................................... 27

4.5 Key Regulatory Issues .......................................................................................................... 28

5 Middle East Markets: the UAE, Saudi Arabia, Kuwait, Qatar, Oman, Bahrain

31

5.1 Financial Products and Services Offerings ........................................................................... 32

5.1.1 The UAE ........................................................................................................................ 32

5.1.2 Saudi Arabia .................................................................................................................. 34

5.1.3 Kuwait ............................................................................................................................ 35

5.1.4 Qatar ............................................................................................................................. 36

5.1.5 Oman ............................................................................................................................. 37

5.1.6 Bahrain .......................................................................................................................... 37

5.2 The Role of Family Office: Managing Wealth of HNWIs and UHNWIs ................................. 39

5.3 Business Strategies for Targeting HNWIs and UHNWIs ...................................................... 41

5.3.1 Expansion strategy ........................................................................................................ 41

5.3.2 Client strategy ............................................................................................................... 43

5.3.3 Marketing strategy ......................................................................................................... 47

6 About WealthInsight ........................................................................................ 49

Insight Report: Business Strategies for Targeting HNWIs in the Middle East

© WealthInsight | This report is a licensed product and is not to be photocopied. 8

LIST OF TABLES

Table 1: HNWI Wealth Band and Group Definitions .................................................................................................................... 6 Table 2: Needs of Middle Eastern UHNWIs in Private Banking and Wealth Management ......................................................... 10 Table 3: Preference of Middle Eastern and African HNWIs in Philanthropic Activities by Cause (%), 2013 ............................... 13 Table 4: Competitive Benchmarking for the Wealth Management Sector in Key Middle Eastern Markets ................................. 14 Table 5: Key Parameters for the Wealth Management Sector in GCC Markets ......................................................................... 15 Table 6: Overview of Strategies to Target HNWIs in the Middle East ........................................................................................ 16 Table 7: HNWI Populations in the Middle East, 2010–2019 ...................................................................................................... 17 Table 8: HNWI Wealth in the Middle East (US$ Billion), 2010–2019 ......................................................................................... 18 Table 9: UHNWI Market Size in the Middle East, 2010–2019.................................................................................................... 19 Table 10: UHNWI Wealth in the Middle East (US$ Billion), 2010–2019 ..................................................................................... 20 Table 11:Top 10 HNWI Families in the Middle East by Wealth (US$ Billion), 2014 ................................................................... 23 Table 12: Business Formation Options for International Financial Services Operators .............................................................. 29 Table 13: Domestic Banks in UAE and their Main Product and Service Offerings ..................................................................... 33 Table 14: Domestic Banks in Saudi Arabia and their Main Product and Service Offerings ........................................................ 34 Table 15: Domestic Banks in Kuwait and their Main Product and Service Offerings .................................................................. 35 Table 16: Domestic banks in Qatar and their Main Product and Service Offerings .................................................................... 36 Table 17: Domestic banks in Oman and their Main Product and Service Offerings ................................................................... 37 Table 18: Domestic banks in Bahrain and their Main Product and Service Offerings ................................................................. 38 Table 19: Family Offices in the Middle East .............................................................................................................................. 39 Table 20: Major Acquisitions in the Middle East, 2012–2014 .................................................................................................... 42 Table 21: Key Domestic Islamic Banks in the Middle East ........................................................................................................ 44 Table 22: Examples of International Banks Adopting Islamic Principles .................................................................................... 45 Table 23: Wealth Management Services for Family Businesses in the Middle East .................................................................. 46 Table 24: Internet Users in the Middle East, 2014 ..................................................................................................................... 48

Insight Report: Business Strategies for Targeting HNWIs in the Middle East

© WealthInsight | This report is a licensed product and is not to be photocopied. 9

LIST OF FIGURES

Figure 1: HNWI and UHNWI Populations, 2014 ........................................................................................................................ 21 Figure 2: HNWI Populations by Age Group, 2014 ..................................................................................................................... 22 Figure 3:HNWI Population by Gender, 2014 ............................................................................................................................. 23 Figure 4: HNWI Populations by Primary Source of Wealth (%), 2014 ........................................................................................ 24 Figure 5: HNWI Populations by Industry Concentration (%), 2014 ............................................................................................ 25

Insight Report: Business Strategies for Targeting HNWIs in the Middle East

© WealthInsight | This report is a licensed product and is not to be photocopied. 10

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