Citi taps wealthy family clients to boost private bank

DUBAI Thu May 2, 2013 1:42pm EDT

A Citibank branch is seen in Washington January 19, 2010.REUTERS/Jim Young

A Citibank branch is seen in Washington January 19, 2010.

Credit: Reuters/Jim Young

DUBAI (Reuters) - Citigroup Inc (C.N), one of the world's largest banks, is betting on wealthy Middle Eastern family firms who are in expansion mode to boost its private bank business, senior executives said.

Citi's family office unit is part of the private bank business which manages over $250 billion in assets and serves over a third of the world's billionaires.

Citi first moved into the market for family offices - mini financial institutions set up by rich families to manage their affairs - in 2010 when it set up a unit to cater to them. In March this year the bank appointed Anthony Habis, a managing director at its institutional clients group business, to head the family office coverage in the region.

Many of the families own businesses which are corporate banking clients of the group. The families themselves have now started to diversify away into sophisticated asset classes and have become more institutional in their operations.

A key market for Citi's family unit is the Middle East, home to some of the world's oldest family businesses like Dubai's Al-Futtaim Group and Saudi Arabia's Olayan Group, who controls lucrative businesses such as oil and gas and automobiles.

"What we are seeing is that the old money has become more progressive and more institutional in the thinking and there is a big push to build out the capabilities," Habis said in an interview.

"You are seeing some of the largest family offices setting up in Geneva, London and New York which wasn't the case earlier. They are being smarter with the money they spend," said Habis, who took up the new role in March.

Industry-wide assets under management for single-family offices stood at about $1.2 trillion in September 2011, while multi-family funds had assets of $777 billion in December 2012, according to a study by Boston-based Cerulli Associates.

Middle East clients have toned down their aggressive return expectations and are now focused on wealth preservation, capital protection and estate planning instead, Habis said.

Broadly speaking, family office clients around the world are looking for more cross-border investment opportunities and generally tend to prefer real estate investments, said James Holder, head of family office for Europe, the Middle East and Africa at Citi Private Bank.

"In an environment where families are worried about currency, debasing of currency values globally, where there are many different risks, families seem confident owning real estate," Holder said, adding the bank is scouting for real estate investments in the United States and Britain on behalf of its clients.

"We also see more interest in Madrid and Spain as well on real estate," he added.

Citi has also recently hired key personnel across Europe for its family office business. The bank named Markus Von Wallenberg from Credit Suisse as head of family office coverage for German speaking Europe, Thor Askeland from Barclays (BARC.L) as head of Nordics and Francesco Lombardo di San Chirico to run Italian operations for the family unit.

"We feel comfortable that we have got to a point across EMEA region where our key family office personnel are in place," Holder said.

(Reporting by Dinesh Nair; Editing by Sophie Walker)

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Comments (2)
krimsonpage wrote:
Good, Citi has figured out how to ripoff even the uber wealthy. And why not? If things go south, they go back to Uncle Sam and demand more TARP.

May 02, 2013 1:58pm EDT  --  Report as abuse
cammanchee wrote:
Also, this story brings up something people mentioned yesterday. What are they buying with their money? REAL ESTATE. They are scouring the U.S. for good “investments”, aka cheap housing/commercial property to buy in the hope the housing market returns to the way it was before the real estate crisis to then sell and make massive amounts of money.

Talk about wealth re-distribition. There was an article yesterday touting how great the housing numbers and price increases were, along with the fact that home ownership was the lowest it was in 18 years. Well, it’s due to people like this, not ordinary families, out there purchasing homes. It’s going to be hard for some rich families to live in the thousands of homes they are buying or operate all the commercial property they own. The only problem with their theory is that when companies are refusing to hire more and more workers, continue to cut workers, stagnate or lower wages as much as possible, and constantly try to manufacture or offer services with less and less people working for them, they are going to have an extremely hard time getting housing and the real estate market back to the way it was.

You need people with expendable cash and good incomes to buy these homes, but I forgot, people scream it’s socialist to spread the wealth around so everyone can afford more than just the necessities. Instead of the wealthy taking a super massive part as they do now, they need to take a large part, and spread the wealth to everyone else. When people have that money, they will buy said companies products and services thus creating a strong economy once again and the wealthy can continue to earn more and more on an equal level, along with everyone else.

May 02, 2013 3:14pm EDT  --  Report as abuse
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