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<;L8I;F C<<D8EE# :<F F= =8C:FE GI@M8K< 98EB Falcon Private Bank may be small and nimble, but it is owned by Abu Dhabi’s mighty Aabar Investments, a fact that has allowed it to punch above its weight in the Middle East. Managing $13.5 billion in assets, the Zurich-based wealth manager is dwarfed by a lot of its Swiss competitors. But the presence of Aabar, which bought the firm in late 2008, provided instant credibility and reassurance for potential Gulf clients. This is a reality not lost on Falcon CEO Eduardo Leemann, who said: “Without Aabar it’s very difficult to expand into the region. Our owners are extremely well-known and respected.” Aabar is regularly called upon to identify the “good guys and bad guys” in the Middle East, he said. “This high level local knowledge means that it’s almost like operating in Falcon’s home market. It’s like having our Zurich clients just round the corner.” But the relationship comes at a price for Falcon, which must seek authorisation from Aabar on major decisions, typically large credit facilities above $25 million or certain high-risk investments. A large capital deployment, such as the acquisition of another bank or buying a new IT system, would also require Aabar’s sign-off. Leemann added that the arrangement ,) & J<GK<D9<I )'((
doesn’t extend to the Abu Dhabi company sharing its GCC private banking contacts. Still, Falcon expects its assets under management to nearly double to $25 billion in five years as it taps the growing wealth in Gulf and Asian markets. The bank, formerly known as AIG Private Bank, was bought from the crippled US insurance giant AIG by Aabar in 2008 for 288 million Swiss francs (Dhs1.2 billion). Falcon seeks to target individuals with a minimum wealth of $5 million. In the UAE, it currently manages $600 million of assets, but Leemann said by the end of 2011 this could hit $1 billion. It opened a branch in Abu Dhabi in April, joining its existing branches in Dubai, Hong Kong, Singapore and Geneva. Falcon has also applied for an investment advisory licence with the UAE Central Bank that is currently under processing. “Middle East investors go with Falcon because they like to have local investments booked somewhere else, for instance Singapore or Zurich,” said Leemann. “For them it’s about political diversity and the diversification of risk. They like Arab National Bank and First Gulf, but they also like us.” He said there was a danger of the Gulf getting overcrowded, especially with rivals Julius Baer, UBS, JP Morgan and
Bank Sarasin expanding their operations, but he added that the region was “still very attractive”. Leeman admits that Falcon, like other banks in Switzerland, have suffered recently because of currency fluctuations between the Swiss franc, Euro and US dollar. “The bad news for banks like us with a big portion of costs being booked in Swiss francs, is you lose out on the currency situation. The revenues are in Euro and USD, but the currency has changed against the Swiss franc of late, so margins have been weakened. Then add this to a dull market environment and it makes people very risk-averse.” But he said that unlike its larger competitors, Falcon has the benefit of agility and can deploy capital to essential markets like the Middle East. “Compared to the bigger players in private banking, we can act much more quickly on the ground in the region. Most of the big hitting banks will see the MENA region as just another region, where internal capital allocations are competing with, for example, regions like Africa and Asia. “When it comes to investment allocation, MENA has to fit into this huge global network, which means their money or appetite may not necessarily be there. We don’t have this problem,” he said.