U.S. wealth manager looks to expand in Saudi Arabia, Kuwait and other mkts. Citigroup is joining a growing cadre of wealth managers salivating at the prospect of advising oil-rich Arabs. The New York-based megabank figures its private-banking unit will be managing around $40 billion for Gulf Arab within five years.

Citigroup won't say how much it manages for private clients in the Middle East right now. Together, Asia and the Middle East account for 25% of Citigroup's 25,000 private-banking clients the world over, and around $80 billion in private-wealth assets managed.

Huge boost

"The wealthy are getting even wealthier, so you are talking about exponential growth," Akbar Shah, Citigroup's head of global wealth management for the Middle East, told Reuters last week. "We're preparing for a huge boost in our business."

There were around 300,000 U.S.-dollar millionaires with $1.2 trillion in financial assets in the Middle East in 2005, up 19 per cent over the previous year, according to a report by Merrill Lynch and Capgemini.

Citigroup sees its Middle Eastern private-client assets growing by around 25% a year -- fueled in part by rising oil prices. Gulf-state investors, who account for the bulk of this growth, are moving away from traditional investments in Europe and North America into Asia as their appetite for risk increases, according to Shah.

"European investments in general have been yield driven, but Asia is now more of a capital-appreciation play," says Shah. "The yields are lower but the capital appreciation is so fast."

Citigroup Private Bank, which already has branches in Bahrain and in the United Arab Emirates, is in talks to set up operations in Saudi Arabia. It expects to get the OK to do business in Kuwait next year. -FWR

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