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Wells Fargo Targets Mideast Wealth Funds in Dubai Expansion

Wells Fargo & Co., the U.S. bank that counts billionaire Warren Buffett’s company as its largest shareholder, is targeting Persian Gulf sovereign-wealth funds as it seeks to expand its client base in the Middle East.

“We are keeping our focus on banks and investment banks, and also plan to target sovereign-wealth funds in the U.A.E. and Qatar,” Shoar Hassan, the bank’s senior executive officer and regional manager for Middle East and North Africa, said yesterday in an interview in Dubai. “We’re looking at what’s worked well for us in the U.S. and are bringing it to the Middle East. We want to deepen our wallet with our clients.”

The San Francisco-based company, which opened an office in the Dubai International Financial Centre last month, currently provides financial institutions with services such as trade, payments and deposits in the Middle East. The bank also plans to expand the products it offers to include capital markets, asset management, foreign exchange and derivatives, Hassan said.

The Middle East is home to some of the world’s largest wealth funds, buoyed by proceeds from the region’s oil reserves. Many of these funds are choosing to invest locally and increase state programs after the Arab Spring.

Wells Fargo employs 12 people in its Dubai office after setting up there 15 years ago and plans more hires, Hassan said.

Stepping Up Efforts

Last year, 56 percent of new money from Gulf sovereign wealth funds was invested in the six-member Gulf Cooperation Council, up from 33 percent in 2011, Invesco Ltd. said in May.

Royal Bank of Canada is also seeking to compete with London and New York-based banks such as HSBC Holdings Plc, State Street Corp., JPMorgan Chase & Co. and Bank of New York Mellon Corp. in custodian services for wealth funds.

The amount of cash, stocks, bonds and other assets the Canadian bank holds on behalf of Middle East funds rose by 20 percent last year as investment pools diversified, Cormac Sheedy, senior executive officer for the Middle East and Africa at the bank’s RBC Investor Services Trust unit, said last month.

In the United Arab Emirates, the Abu Dhabi Investment Authority, the country’s largest wealth fund, had assets valued at $328 billion at the end of 2008, according to economists at the New York-based Council on Foreign Relations.

In Qatar, holder of the world’s third-largest gas reserves, the Qatar Investment Authority is snapping up assets to reduce its dependency on energy revenues. The fund had $30 billion to invest last year, QIA board member Hussain Al Abdulla said in April.

’Room to Expand’

While Wells Fargo is seeking to expand in the region, lenders including Morgan Stanley and Credit Suisse Group AG, are cutting staff in Dubai as trading dwindles and clients postpone share sales. Average daily trading volume in Dubai this year is about 50 percent less than the amount traded in the same period in 2008, according to data compiled by Bloomberg.

“Some of the large international banks are scaling down here because they had big teams to begin with,” Hassan said. “We are very small and so have plenty of room to expand. There is enough business for us to grow.”

“Our capability is very much U.S. dollars and the market here is U.S. dollars,” Hassan said. “We have liquidity and we can share that with our clients.”

Buffett’s Berkshire Hathaway Inc., the Omaha, Nebraska-based investment company, holds a stake of about 8 percent in Wells Fargo, according to data compiled by Bloomberg.

Wells Fargo declined 1.1 percent to $34.76 in New York yesterday. They have gained about 2 percent this year.

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