Super-rich prefer to put their money in private banks abroad
Kenya’s wealth management industry is underdeveloped as majority of the super-rich prefer use of foreign private firms and hold their money outside the country. Others that have expressed interest of setting up in the country are Credit Suisse and UBS of Switzerland, RMB and Standard of South Africa. AFP/PHOTO
What you need to know:
- About 50 per cent of these high-net-worth individuals are elite with political connections, and are estimated to have $10 billion (Sh860 billion) banked abroad — constituting 30 per cent of the national wealth. The money is banked mostly in private banks in UK, Switzerland, Cyprus and Channel Islands.
- The report adds that the current crackdown on the offshore centres might force super-rich Kenyans to repatriate their wealth—further boosting the local wealth management system. Many countries have intensified vigilance over movement of funds with the objective of stopping funding of terrorist networks.
- Among the foreign private banks in Kenya are Barclays of UK and Sanlam of South Africa. Others that have expressed interest of setting up in the country are Credit Suisse and UBS of Switzerland, RMB and Standard of South Africa.
Kenya’s wealth management industry is underdeveloped as majority of the super-rich prefer use of foreign private firms and hold their money outside the country.
A newly released report by New World Wealth says the high-net-worth individuals in Kenya bank their money in foreign banks.
“The majority of wealthy Kenyans use foreign private banks, which hold their money abroad. As a result, the local private banking industry is totally underdeveloped,” the report says.
About 50 per cent of these high-net-worth individuals are elite with political connections, and are estimated to have $10 billion (Sh860 billion) banked abroad — constituting 30 per cent of the national wealth. The money is banked mostly in private banks in UK, Switzerland, Cyprus and Channel Islands.
According to the London-based New World Wealth, a large proportion of the local wealth was in 2013 held in offshore accounts.
However, Kenya’s wealth management systems is set to benefit from strong growth of wealth in other East Africa countries, which have less developed banking systems, and are likely to opt for Kenyan banks.
WEALTH MANAGEMENT
“Kenya’s wealth management industry is likely to expand over the forecast period as more high-net-worth individuals are created and as banks begin to set up in the country.”
The report adds that the current crackdown on the offshore centres might force super-rich Kenyans to repatriate their wealth—further boosting the local wealth management system.
Many countries have intensified vigilance over movement of funds with the objective of stopping funding of terrorist networks.
Among the foreign private banks in Kenya are Barclays of UK and Sanlam of South Africa. Others that have expressed interest of setting up in the country are Credit Suisse and UBS of Switzerland, RMB and Standard of South Africa.
In Kenya, the wealth management service providers are Dry Associates, GlobalEye, Intouch Capital, Inter Alliance International and Private Wealth.
Most wealthy families in developed countries have their assets and funds under managers, but there are no known family offices in Kenya. The report says that this segment is expected to grow as more millionaires come up.
Family offices are involved in management of household staff, property management, philanthropy coordination, family education, inter-generational transfer and legal and tax services apart from the usual investment services.
The report says there are 2,700 single-family holding of $1.7 trillion and 2,300 multi-family offices holding $800 billion in the world—making it a big business.
According to the report the low-tier millionaires tend to hold cash, and real estate billionaires tend to invest in commodities and alternative assets as hedge funds while affluent millionaires are likely to invest in fixed income and equity.
