French banks eye North Africa for wealth management opportunities
North Africa’s private banking networks are expanding in line with the region’s development.
In any discussion about the Middle East and north Africa (MENA) region, North Africa seems to have been added as an afterthought: the oil-rich more prosperous countries in the Middle East steal most of the attention.
Yet wealth in northern Africa is on the rise and France’s banks have taken note. Amundi, Crédit Agricole and BNP Paribas have all established partnership arrangements with local retail banking groups to target wealth management and private banking opportunities in the region.
One interesting source of wealth is the region’s burgeoning entrepreneurs, who are making high margins with relative ease.
When they become very successful with more than €1m in assets, these entrepreneurs are no longer simply dentists opening up new clinics, but property developers or service providers.
According to French consulting group SIA Conseil, 1% of Moroccan households (105,000 households) had a total wealth of between €50,000 and €500,000 in 2007. SIA estimates that a further 45,000 households had between €0.5m and €30m.
A study by the OECD estimates that the number of millionaires (individuals with more than $1m) in the MENA region is growing at an annual rate of 3%.
The French banks are well established in north Africa, due to their retail distribution networks that have roots in France’s colonial past.
They are therefore several steps ahead of other European banking groups eyeing the region’s rising high-net-worth individuals as prospective private banking clients.
But that does not mean the French groups are without competition: some of the local banking groups are already tackling the private banking market alone, without the additional clout of a foreign banking group.
According to Yoann L’Honneur (pictured), associate director at consultancy group Velhon Partners, local banks such as Morocco-based BMCE Capital have begun organising themselves, developing strong corporate and investment banking operations. They are now recognising the new type of growth opportunity offered by the region’s wealthy, he says.
BMCE’s foothold in the north African asset management market is a concern for the French entities hoping to dominate. In the first half of 2010, BMCE declared its asset management subsidiary BMCE Capital Gestion recorded 14% growth in assets under management, positioning itself as the third asset management firm in its sector with a market share gain of 0.24% to 12.1%.
L’Honneur confirms the two groups vying for the greatest share of the private banking market in northern Africa are local banks and predominantly French foreign-owned banks.