Hong Kong will have to create a talent pool with expertise in the Middle East and Islamic finance if it wants to attract wealthy families and companies from the region to invest in the city, according to a veteran banker.
“Hong Kong needs to have a long-term training programme or import talent to bring Middle East investors to the city,” said Derrick Tan, a private banker who has been servicing wealthy clients in Asia for more than two decades.
Hong Kong will also have to make it convenient for Middle Eastern customers to open bank accounts so that they can invest here, Tan said in an interview with the Post.
“We have come across some individual Middle East clients who have had difficulty in opening personal accounts with banks in Hong Kong,” said Tan, the chairman of Wrise Group Holdings, a wealth management platform.
The global Islamic finance industry, which is guided by sharia Islamic law, principles and rules, currently boasts assets of around US$2.2 trillion and is anticipated to grow to US$4.94 trillion by 2025, according to a report by Standard Chartered in April.
The demand for Islamic products such as sukuk (bonds) and takaful (insurance) could be fuelled by a combination of Islamic banks together with sharia-compliant sovereign wealth funds, asset management companies, pension funds and family offices, Standard Chartered said.
Hong Kong Chief Executive John Lee Ka-chiu, Financial Secretary Paul Chan Mo-po and Hong Kong Monetary Authority (HKMA) CEO Eddie Yue Wai-man have led separate delegations to various Middle East countries this year to attract investments and forge closer ties.
In June, the HKMA and the central bank of the United Arab Emirates said they would work together to promote cross-border payments and investments between the two sides. On Wednesday, HKMA CEO Yue signed an agreement with the central bank of Saudi Arabia to jointly promote fintech projects.
Bourse operator Hong Kong Exchanges and Clearing CEO Nicolas Aguzin and chairwoman Laura Cha Shih May-lung have also undertaken trips to Middle East this year to attract investments and to entice Gulf firms to list here.
“The roadshows by Hong Kong government officials and bankers in the Middle East to build relationships is a good start,” Tan said. “Now, they need talent who know how to follow up.”
When it comes to China, Hong Kong’s financial sector has a big pool of talent who are well-versed with the culture and language and have the network to serve customers on the mainland.
Hong Kong’s active capital market and backup from China will attract Middle Eastern investors, Tan said. “However, Hong Kong does not have many people who can speak Arabic, understand Islamic finance requirements, or fully understand the background of the different countries in the Middle East,” Tan said.
“This makes it hard for local financial firms to serve Middle East tycoons.”
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When Tan started off as a banker 23 years ago, banks in Hong Kong had different teams to serve wealthy clients in Muslim-majority countries Malaysia and Indonesia, who understood sharia rules.
But with banks turning their focus on the mainland Chinese market, most of them no longer have such teams and many local bankers do not know Islamic finance.
“To solve the problem, Hong Kong can offer incentives to attract talent with experience in handling Middle East clients, or the local firms can send Hong Kong youth to learn in these countries,” Tan said.
Tan is an example of how Singaporean companies nurture talent to tap the Middle East market. Born and brought up in Singapore, Tan worked in several banks including HSBC, UBS and Bank of Singapore – the private bank unit of OCBC. He was in charge of Bank of Singapore’s Middle East operations from 2014 to 2017, where he built the bank’s network and client base.
After his stint as the Bank of Singapore’s Hong Kong CEO in 2021, he set up Wrise to serve ultra-high net worth customers in Hong Kong, China and Dubai.
“Without experience in managing Dubai and other Middle East markets, I would not be able to serve Middle East clients,” he said.
Many Middle Eastern wealthy individuals and families want to diversify their investments, and Hong Kong can capture those opportunities by attracting them to set up family offices here, said Nelson Chow, chairman of the Hong Kong Investment Funds Association, the funds industry guild.
“Hong Kong can introduce more policies to attract these Middle East family offices to set up here to invest,” Chow said.
“Once they have a good experience investing in Hong Kong, the city can expand to offer other fund products or investment vehicles for investors from the region.”—South China Morning Post
