Citigroup hiring to tap the Gulf family office market

Alamy via Reuters Connect

• Citigroup strengthening Dubai team
• $1 trillion of Gulf wealth in transition
• Competitive family office market

Citigroup says it is expanding its presence in the UAE, the second-largest Arab economy, as it competes to manage more of the assets of wealthy Gulf merchant families.

$1 trillion of these assets are expected to shift to the next generation by the end of this decade.

To boost its capabilities, the US bank says it is hiring talent from competitors and relocating some of its own private bankers from other parts of the world to Dubai.

Competitors, ranging from Goldman Sachs and Morgan Stanley to UBS and JP Morgan, have been hiring dedicated specialists as they seek to tap a global, so-called family office market that, according to Deloitte, may be worth as much $9.5 trillion by 2030.

“We’re bringing talent in from competitors that will be based here in Dubai,” Andy Sieg, head of Citi’s global wealth division, told AGBI in an interview.

“We are also looking at [relocating] some of our most talented private bankers and using this as a base to serve clients.”

Supplied: Citibank

About 85 percent of Gulf companies are family run and they contribute to about 80 percent of non-oil gross domestic product (GDP), according to accountants PwC. The top 10 family businesses in the region by assets employ about 600,000 people and are worth more than $31 billion, according to a 2023 KPMG report.

As the generation that made billions starting with the oil price surge in the 1970s and 1980s dies out, interest in succession planning and the transfer of wealth to the next generation is growing.

For now, that wealth is still heavily concentrated with the older generation, according to a report by the Dubai International Financial Center (DIFC) and Julius Baer.

“In order for this wealth to spread, over one trillion dollars will need to be distributed to families and children within the next decade, putting significant pressure on the already strained processes and procedures that support wealth transfer today,” the report reads. 

Some Gulf patriarchs are only now setting up family offices after decades of closely held financial management, according to Citigroup’s Sieg, while others lack access to financial advice networks and expertise. 

The prospect of transitioning wealth to the next generation is also forcing families to rethink financial governance, with many delaying succession planning.

Some third-generation heirs are demanding greater autonomy from their parents, with some family offices now managing 25 or more separate investment portfolios within the same family, Sieg said.

“Demographics drive wealth management,” he said. “Some people would like to tap the money now, others are viewing this as funds they’re not going to touch for many years.”

Citigroup is not alone in boosting its wealth management capabilities in the Gulf. Standard Chartered opened its first so-called “priority private” centre in the Middle East and Africa in Dubai this month, targeting high-net-worth individuals (HNWIs) and their cross-border financial needs.

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The UAE federation, of which Dubai is the largest by population, has been positioning itself as a global destination for family offices and HNWIs.

The DIFC – a zone in Dubai with its own international standard financial regulations – and the Abu Dhabi Global Market offer 40-year corporate tax exemptions, with the latter also allowing family offices to operate with no minimum asset threshold.

“They’re [the banks] coming for a slice of the pie but the pie itself is growing massively,” said Sieg. “This isn’t about battling over a stagnant pool of opportunity, this is planting your flag where some of the fastest growth in the world is happening.”