Gulf-based private banks are unlikely to follow HSBC’s decision to withdraw their private banking services from US clients living abroad.HSBC Private Bank in July said it would no longer offer its wealth management services to American clients living outside of the US and said customers had 30 days to close their accounts.The move follows planned new rules which will force non-US financial institutions to disclose the details of wealthy US clients following a crack down on US tax evasion.Raj Madha, a MENA banking analyst at Dubai-based Rasmala Investment Bank said Gulf banks were unlikely to follow HSBC’s suit.“We don’t believe that the local banks offer the same kind of private banking service, and even if they did, they have very limited exposure to US clients. The more internationally-minded clients generally use a Swiss bank,” he said.The Middle East has become a target market for international private banks looking to grow their business while local lenders are also ramping up their private banking divisions.
The number of dollar millionaires in the Middle East increased by 10.4 percent last year, representing 400,000 people sitting on a cash pile of $1.7 trillion, according to Merrill Lynch’s World Wealth Report 2011.UAE-based Emirates NBD and Mashreq Bank, who both offer private banking services, did not respond to emails from Arabian Business.“After a review of services that can be provided to US clients from locations outside of the US, we believe that US clients will be better served by our Private Banking teams in the United States,” HSBC said in an emailed statement.Financial institutions have until June 30, 2013, to reach agreements with the US Internal Revenue Service on cooperation.Several banks have already found themselves under the scrutiny of the US authorities. Credit Suisse in July confirmed it was the target of a US Department of Justice probe while rival UBS was forced to pay a $780m fine and hand over the information of around 5,000 secret accounts held by US citizens in 2009.
from / Arabian Business News