Qatar's banking sector should develop its wealth management services to profit from the large number of high net-worth individuals in the wealthy Gulf state, Boston Consulting Group said.

Qatar has the third-highest density of millionaires in the world after Singapore and Switzerland, with 8.9 percent of households having $1 million or more in assets to manage, according to a study done by the company.

"There is a large opportunity for local banks to seize. But so far in Qatar, there hasn't been a bank that has got the business model right," said Douglas Beal, managing director at Boston Consulting Group based in Dubai.

"It's not that they haven't succeeded, it's that they haven't really tried yet."    

The country, which sits on the world's third-largest natural gas reserves, has emerged in recent years as an economic powerhouse thanks to its copious supplies of natural gas.

It now is the world's richest nation with the largest per-capita income, an obvious opportunity for wealth management.
In 2010, Qatar had about $183 billion in assets under management, according to the study.   

Qatar is widely viewed as overbanked, with 18 banks operating in a nation of only 1.7 million, including seven foreign-owned lenders such as European behemoths HSBC and BNP Paribas.

"In Qatar, there are too many banks chasing too few customers. Wealth managers need to realise that they will be one of four or five providers to that individual. I don't think any bank in Qatar has tried to address that yet," Beal said.

Banks in the Gulf Cooperation Council have only recently started to create wealth management businesses, with most of these targeting people with between $100,000 and $1 million to manage.

"If you're in the asset management business in Qatar, you want to focus on the $5 million and above group. Most of the wealthy keep about one-third of their wealth onshore, and they're looking for someone locally to manage that money.
There's a lot of profit to be made from that."    

Globally, the wealth management sector is expected to grow at a compounded annual rate of 5.9 percent from year-end 2010 through 2015 to about $162 trillion, driven by the performance of the capital markets and economic growth in emerging markets, the company's report said. - Reuters