Private Banking in the UAE 2023 (2024)

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Buyers' Guide

Private Banking in the UAE 2023

5 October 2023 Written by Arpan

The UAE is a growing hub for high-net-worth individuals and ultra-high-net-worth individuals from across the world. In 2023 the number of HNWIs migrating to the UAE increased by 35,000 according to a report by New World Wealth, with a further 24.6% increase expected over the next 5 years. While the world was in the grip of uncertainty at the height of the Covid pandemic, the UAE bucked the trend, witnessing a sharp economic rebound over the second half of 2020, and a growth in private wealth assets from USD 825 billion in June to north of USD 870 billion by the end of the year. There are an estimated 83,000 HNWIs residing in the UAE at present, each with a net worth of at least USD 1 million. As a result, there is a greater need for private banking and wealth management firms to help in managing those assets. There are quite a few private banking services you can benefit from in the UAE, and particularly in Dubai, which continues to be a destination of choice for HNWIs from all over the world.

The most significant benefit of private banking is the level of personal attention that is given to your financial needs and goals. You can be assured that you are working with a team that has your best interests in mind and operates with full discretion. Here are just a few of the advantages that private banking offers.

When you are part of a private banking relationship, you have a dedicated wealth manager/banking advisor who will be working with you to help in managing your assets. Additionally, you will have access to a team of financial experts, including specialists in mortgage, insurance and tax advisory. Your team keeps an eye on the global financial market, understanding and adapting to changes that occur so that you are always in a position to make the most sound financial decisions.

Multi-Jurisdiction Currency, Investment & Asset Management

If you consider yourself to be a global citizen with assets in different jurisdictions and in different currencies, private banking gives you a way to manage everything seamlessly across borders. You will receive advice on the best investment options that will help in growing your assets, which includes opportunities that might not be readily obvious. As part of the relationship, you also have access to premium banking services worldwide, which includes the availability of a certain amount of ‘emergency cash’ that can be withdrawn from any ATM when you need it.

Exclusive Privileges

Clients of private banking relationships enjoy the benefit of certain perks - some banks offer bonuses and rewards for signing up. You also get preferential interest rates, preferential rates for currency exchange, and fee waivers on certain financial services. Several institutions host members-only events as well.

Better Business

For business owners who have their company accounts in the same bank as their private banking relationships, this can lead to potential benefits for business banking - commercial loans can be secured more easily, and there could be discounts and other privileges to avail of.

The push to fully digitize wealth and asset management has been accelerated thanks to the pandemic, where people prefer to avoid in-person interactions to the extent possible. A solid online framework, as employed by the most well-known and reputed global banks, helps to ensure that you can always keep track of your assets easily no matter which country you might be in.

This is of tremendous benefit to business travellers or to HNWIs who might spend most of their time outside the UAE but still have assets within the country. They can conveniently keep track of everything without having to fly in for a meeting, as would have been the case previously.

Cons of Private Banking

While it is a very attractive prospect to have a personalised financial and asset management service via private banks, it is not without its drawbacks. Here are a few of the downsides of private banking.

High Fees

There are management fees associated with a private banking relationship, and there may be additional fees for certain premium services. Depending on the value of your assets and the exact nature of what you are getting out of private banking, you may need to review the potential costs carefully before signing up.

Turnover is another huge factor, especially in the banking and finance industries. In the event that your private banker leaves their current organisation, you will have to start over with a new advisor and bring them up to speed on where you are. Alternatively, you might opt to stay with the same banker, in which case you will need to change banks - which would be an additional cost.

One of the darker aspects of private banking is that it can be used as a means to hide assets in order to stay in a lower tax bracket, or to avoid paying taxes completely. As a result, many countries around the world, particularly in Europe, have started imposing stricter regulations on private banking institutions to maintain honesty and transparency in all financial dealings - which is at odds with the discretionary nature of private banking. This can in some ways be an advantage for clients as well.

Ultimately, if you have a considerable value of assets that you want to feel completely secure about, then private banking is an option that is well worth the cost. To learn more about private banking in Dubai and about our preferred banking partners, don't hesitate to get in touch with our Private Client Advisory teamtoday.