Now Middle Eastern wealth managers have another employment option: Switzerland

As tension mounds in the Middle East, an increasing number of high net worth individuals in the region are channelling assets out to their trusted Swiss bankers, which is prompting many international firms to increase size of their teams.

There may now be a ceasefire between Israel and Hamas, the region is still dealing with the simmering tensions from the so-called ‘Arab Spring’. Syria is still in the midst of a civil war, Egypt continues to experience problems and the repression of the ongoing uprising in Bahrain has received international condemnation.

For wealthy individuals, the pressure to book assets offshore is increasing. “There’s been a heightened focus on the region in the past week or so during this period of political uncertainty, but since the Arab Spring last year there has been an increased flow of assets towards Switzerland by high-net-worth individuals in the Middle East,” says Cath Tillotson, managing partner of wealth management consultancy The Scorpio Partnership. “The fact that so many banks have been building their Middle East teams in Switzerland shows that demand is strong.”

High net worth individuals in the Middle East have always had a tendency to book their assets offshore in locations like the UK and Switzerland. Part of this is down to the status symbol of having your own Swiss private banker, but there’s also more of a focus to diversify their investments internationally.

A recent survey by Boston Consulting Group suggested that more Middle Eastern wealth was booked offshore than any other region. 34% of assets in the MENA region are managed offshore, compared to 25% in Latin America, 7% in Asia-Pacific and 2% in North America. Last year, MENA assets in Switzerland climbed 14% to CHF560bn.

“Uncertainty always makes a good case for Switzerland,” says Jean-Marc Aiello, head of professional banking at recruiters Randstad in Zurich. Demand has increased for Swiss private bankers with Arab clients, he adds.

In recent months, Lloyds Banking Group named Anthony Valgimigli as head of its high net worth business for the Middle East, based out of Zurich, Julius Baer hired Daniel Savary as head of Eastern Mediterranean & Middle East in Zurich and Credit Suisse moved the head of its Middle East private banking equity research division, Kamran Butt, from Dubai to Geneva along with other analysts.

Despite this trend, international wealth managers have been building their presence on the ground in the Middle East. Both Coutts and Barclays have been particularly active this year, while Lombard Odier has signalled that any future hires for its Middle East team will be focused on the United Arab Emirates.

“Traditionally, Swiss banks had a representative office in the Middle East, but increased competition from local players has led many to create a full-service capability on the ground in the region,” says Tillotson.

Finding the right people for Middle Eastern teams in the region remains a headache for wealth managers looking to expand. As Rory Gilbert, managing director and head of wealth and investment management for MENA at Barclays, told us recently: “You have a significant amount of demand, limited by supply, for the same set of skills. It’s hard to find the right blend of technical, interpersonal and client skills.”

It doesn’t help that Swiss and UK banks are targeting this talent pool. Magdy El Zein, managing director of headhunters Boyden Middle East: “There’s a big appetite among private banks in both Switzerland and the UK to recruit private bankers currently based in the Gulf into their offshore Middle East teams. A combination of experience in Western hubs and exposure to the Middle Eastern market is what most firms are looking for currently.”