Rothschild strikes deal for Middle East business as banks chase wealthy clients
Deal struck with Liechtensteinische Landesbank, which is retreating from the UAE
Rothschild & Co is expanding its Middle East wealth business through a deal with Liechtensteinische Landesbank (LLB), as international banks beef up their offerings for rich clients in the fast-growing Gulf region.
The two-century-old bank, which opened a wealth management division in Dubai only last year, has struck an agreement with LLB to pick up its Middle East clients as the Liechtenstein-based bank retreats from the United Arab Emirates.
The deal comes as ultra-wealthy people flock to the low-tax UAE with many fleeing changing taxation regimes in Europe and the UK, according to lawyers and advisers.
If LLB’s clients accept Rothschild as their new wealth manager, the bank said it would potentially pick up SFr1bn ($1.2bn) in assets as part of the deal.
“We are turbocharging our Middle East presence with this deal,” said Laurent Gagnebin, Rothschild’s chief executive of wealth management in Switzerland, describing the acquisition as “a decade of growth in one go”. Gagnebin said he was confident clients would remain with Rothschild.
Rothschild already has investment banking and alternative investments divisions in the Middle East, which Gagnebin said would complement the wealth management unit and were a “key differentiator” to other Swiss private banks in the region.
Other Swiss banks including Lombard Odier, UBS, Julius Baer and Pictet have a presence in the Middle East and many are also expanding.
Many Swiss-based family offices have relocated to Dubai in recent months as regulation and taxes have eroded the Alpine country’s attractiveness for some wealthy individuals.
“This represents our high conviction in the UAE’s potential, given the increasing concentration of both regional and global wealth here,” said Alexandre de Rothschild, the bank’s executive chair.
Rothschild said it would also take over LLB’s Dubai office. Following the deal, Rothschild’s Middle East wealth management unit will have 25 staff — 20 of whom will come from LLB, which opened its office in Abu Dhabi two decades ago, followed by a Dubai outpost in 2008.
Some private bankers complain that a rush into the Middle East wealth management market has stoked intense competition for qualified talent in Dubai, the region’s financial hub.
But success is far from guaranteed. Despite its 20-year history in the UAE, LLB said it was withdrawing from the country to focus on its international clientele closer to home in Liechtenstein, Switzerland, Austria and Germany. The bank is listed in Switzerland with a market cap of SFr2.6bn.
Rothschild says it employs 4,600 bankers across 40 countries. Its asset management business manages €38bn, while its alternative investments unit Five Arrows oversees a further €29bn.