Geneva’s bullish lender on growth in the Middle East
The Swiss-based bank Banque Cantonale de Genève is confident in stable growth in the Middle East for the next five years despite the global economic uncertainty triggered by Covid-19. The more than 200-year-old bank is not aiming for exponential growth in the region as it follows a conservative approach to investing, its chief executive said.
“We are very satisfied with the growth of the clientele over the past five years in the region,” said Blaise Goetschin, Managing Director of Banque Cantonale de Genève. The National.
“I don’t expect an explosion in growth but rather a gradual improvement in the three businesses on which we are focusing.
The mid-sized bank deals with trade finance, correspondent banking and private banking. It has had a representative office in Dubai since 2010 and another in Hong Kong to target clients in Asia.
BCGE, which globally manages $ 33.4 billion in assets in the first half of this year, oversees between $ 500 million and $ 800 million in assets in the Middle East, Goetschin said.
The Middle East accounts for 3-4% of total bank revenues worldwide. Switzerland is its biggest market, followed by France. The Middle East and Asia represent the largest share of BCGE’s turnover on international markets, said Mr. Goetschin.
“We see a lot of growth potential in the region due to the way it has handled the Covid-19 pandemic, the prevailing peaceful situation and an acceptable taxation in international comparison,” he said. .
The UAE’s financial wealth reached $ 600 billion in 2020, undeterred by the financial effects of the Covid-19 pandemic, having grown at a compound annual rate of 3% from 2015, according to a report from the Boston Consulting Group in August. Investable wealth represented about 69 percent.
The United Arab Emirates, where 51% of the country’s wealth is owned by people with net worth over $ 5 million, accounted for 26% of GCC’s financial wealth in 2020, according to the consulting firm. The wealth of the Emirates is expected to grow at a compound annual rate of 4% to reach $ 700 billion by 2025, according to its estimates. Meanwhile, the GCC’s total net wealth is expected to reach $ 6.3 trillion by 2025, up from $ 5.2 billion in 2020.
BCGE, which aims to facilitate the flow of economic exchanges between Geneva and the United Arab Emirates, provides trade finance to commodity trading companies that trade energy, metals and agricultural commodities in the Emirates and have operations in Swiss.
Its team of bank correspondents visit the national banks of the United Arab Emirates and coordinate between banks for monetary deposits, forex and other transactions. Meanwhile, its private banking arm is focused on Swiss nationals and other nationalities in the United Arab Emirates who keep part of their business in Switzerland for different purposes, such as financing a house or a business. company in their home country, the managing director said.
“Globally, trade finance is the most profitable for us. The correspondence bank is also experiencing stable growth. But, there has been some slowdown due to the pandemic. Now he is recovering, ”Goetschin said.
“Our first priority in the region is the United Arab Emirates. We are also interested in Oman, Saudi Arabia, parts of Iraq, Jordan and Egypt, which import many products like grains, wheat, coal, sugar and energy.
On the investment front, BCGE avoids the cryptocurrency space and avoids hiring clients who prefer a more aggressive investment strategy, said the CEO.
“We are skeptical of private illegal cryptocurrencies. We recommend that our clients do not invest in cryptocurrencies.
The view on risk hasn’t changed much after the pandemic, Goetschin said.
“People continue to believe in stocks, which are the most attractive asset class. Bonds currently offer a very low yield. Private equity has made great strides in terms of acceptance.
“We have adopted a stable, consistent and methodological approach to the market. We have diversified our portfolios and verified the stocks in which we invest.
Referring to the interest in environmental, social and governance investments among clients, Mr. Goetschin said the trend is just a communication exercise at the moment, involving a lot of activity with regulators.
“It is very complex to measure the impact of an investment product. We are a commercial bank, businesses are making the transition, but it will take time. Don’t make too many promises to investors, ”he said.
BCGE is currently considering consolidating its operations in the United Arab Emirates, the managing director said.
“We could add one or two more people every two years as the business grows. We are not aiming for big acquisitions. Our first priority is customer quality, ”he said.
BCGE is optimistic about the global economic recovery, said Goetschin, citing manageable inflation, low interest rates, peace and energy costs under control.
“The Middle East region is hedged against short-term energy prices, has intelligence and manpower – all the perfect ingredients for success,” he said.
Updated: November 21, 2021 6:00 a.m.