Pictet Says Persian Gulf Asset Managers Are in `War of Fees'

  • Fees falling as competition in oil-rich region intensifies
  • Investors are taking longer before committing to deals

Pictet & Cie. Group SCA, the biggest Geneva-based bank, said fees for asset managers in the Persian Gulf are falling as competition intensifies and investors become more cautious.

Market volatility is adding to pressure on fees in the region, where a growing number of banks and asset managers are competing for business, according to Francesco Genovese, head of Middle East, Africa and Central Asia for Pictet Asset Management. His role includes sovereign wealth funds, central banks and pension funds in the six-member Gulf Cooperation Council region.

“The market here is very competitive and one way to get more business is to lower your fees, so it’s become a war of fees,” he said Wednesday in an interview at Bloomberg’s Dubai offices. “There’s more volatility in the market so investors are very cautious with their money. We all have to adapt.”

Investors have been challenged by events such as the Swiss franc’s unexpected surge in January, the devaluation of the Chinese yuan in August, and sharp declines in oil and gold prices. Sovereign funds in the Gulf region and elsewhere are taking measures to shore up their finances in response to crude’s almost 50 percent drop in the past year.

Abu Dhabi is reassessing its largest state companies with an eye toward selling assets, four people with knowledge of the matter said last month, while Saudi Arabia’s net foreign assets fell to the lowest level in more than two years in August and demand for loans among private businesses slowed.

While Pictet hasn’t seen a significant drop in investments from the oil-rich region, Genovese said investors are “taking more time to push the button” on deals. “They’ve always been very cautious, but before the investment process would take 12 to 16 months. Now, it’s probably extended to 18 months.” 

Pictet was established in 1805 and is owned and managed by seven partners with principles of ownership and succession that have remained unchanged. It employs more than 3,700 people. Total client assets, including those held in custody but not managed, fell to 420 billion francs at the end of June, from 435 billion francs at the end of December.

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