Bank of America Corp and Wells Fargo & Co are among US lenders targeting sovereign wealth funds and family-owned businesses to expand in the Middle East.
Bank of America, the second-largest US lender by assets, is boosting financing to family-run companies and expects to increase capital raising and transaction banking in the region, according to Fernando Vicario, co-head of debt capital markets and corporate banking for Europe, Middle East and Africa.
“We’re in an expansionary mode and our loan book has grown substantially,” Vicario said on Tuesday in an interview in Dubai. “We’ve had strong double-digit growth year after year and expect this to continue for the next several years.”
Bank of America and Wells Fargo are seeking to gain market share in the region as oil prices drive economic expansion and family-owned businesses seek growth outside their home markets after the financial crisis. That comes as some European lenders pull staff from the Middle East as regulators force them to shrink their balance sheets, reduce risk and raise capital.
“The retrenchment of some foreign banks opened up opportunities for banks like us,” Vicario said. “There’s more competition from local banks but we don’t want to be a big local player.”
Bank of America is in talks about “a number of finance acquisition opportunities,” Vicario said, declining to give details. The Charlotte, North Carolina-based bank is the Gulf’s 17th largest bond underwriter this year, up from 28th a year earlier, helping to arrange $469mn of deals for borrowers in the region, according to data compiled by Bloomberg.
Wells Fargo, which counts billionaire Warren Buffett’s Berkshire Hathaway Inc as its largest shareholder, is building relationships with Middle East sovereign funds as they step up investment in the US. The Abu Dhabi Investment Authority, one of the world’s richest sovereign wealth funds, sets aside 35% to 50% of its portfolio for US investments, according to its 2012 annual report released in May.
“We see long-term potential working with banks and other financial institutions such as sovereign wealth funds,” Chuck Silverman, head of global financial institutions for the bank, also said in an interview. “With the investments these funds are making around the world, and especially in the US, we want to play a coordinating role close to those institutions.”
The San Francisco-based company, which opened an office in the Dubai International Financial Centre in February, provides financial institutions with trade, payment and deposit services in the Middle East. It employs 12 people in Dubai and plans more hires, Shoar Hassan, the bank’s senior executive officer and regional manager for Middle East and North Africa, said in January.
JPMorgan hires former Goldman banker for wealth team
JPMorgan Chase & Co, the largest US bank, hired Antoine Massoud from Goldman Sachs Group Inc for its Middle East private banking team as it seeks to expand the business of managing money for the rich, Bloomberg said.
Massoud will be based in Geneva and report to Jonathan Conner, head of JPMorgan Private Bank in the Middle East, the lender said in an e-mailed statement. He will advise and develop relationships with wealthy individuals and families.
Banks are boosting private banking in the Middle East as the number of millionaires gains, rising 2.7% to 450,000 in 2011, according to Cap Gemini SA and RBC Wealth Management. Coutts & Co, the wealth management unit of Royal Bank of Scotland Group, said in April it hired Michael Dismorr as a managing director for the Middle East. Emirates NBD, Dubai’s biggest bank, said in July it hired Arjuna Mahendran as chief investment officer of its wealth management unit.
Governments in the six-nation Gulf Co-operation Council are using their oil riches to invest in infrastructure and industry. Qatar and the UAE, of which Dubai is the second-biggest emirate, were upgraded to emerging-market status in June by MSCI, boosting prospects of further investment.