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(Bloomberg) -- Citigroup Inc. and UBS Group AG are among international banks managing the largest share of assets for wealthy Saudis, some of whom are being investigated as part of a government probe into alleged corruption, according to people familiar with the matter.

JPMorgan Chase & Co. and Credit Suisse Group AG also manage billions of dollars for some of the kingdom’s richest individuals, the people said, asking not to be identified because of the sensitivity of the matter. Citigroup’s private bank counts Prince Alwaleed bin Talal, the world’s 58th-richest person, and Khalid al-Tuwaijri, former chief of the Royal Court, as clients, two of the people said. Both are among those who were detained in the probe, the people said.

Saudi Arabia has long been the target of wealth managers such as UBS, Credit Suisse and Deutsche Bank AG, as well as other global banks seeking to advise the country’s ultra-rich. The kingdom was the 16th most populous country for high-net-worth individuals last year with 176,000, according to Capgemini’s 2017 World Wealth Report.

It’s not immediately clear what implications the investigation will have on banks and their operations in the kingdom, the people said. UBS, Credit Suisse, Citigroup and JPMorgan declined to comment.

One of the greatest challenges for the banks is “to balance their obligation and abide by the legal requirements of their home countries or the countries where the assets are domiciled,” Ayham Kamel, head of Middle East & North Africa at Eurasia Group, said in a phone interview. “It’s too early to say that their business will be negatively impacted, but there certainly will be additional costs incurred by all of the banks as they manage the issues associated with the anti-corruption campaign and their obligation to their customers.”

Swiss Regulator

Switzerland’s financial regulator Finma is in touch with some Swiss banks over their business with Saudi Arabian clients, two people with knowledge of the matter said. 

The regulator is “following global economic and political developments to assess what they would mean for the supervised banks,” a spokesman said, declining to comment on individual firms.

Private banks don’t usually disclose the amount of assets they manage for individual clients and most assets for Saudi Arabian high-net-worth individuals are held in offshore accounts, making it difficult to quantify the amount.

Crown Prince Mohammed bin Salman’s surprising series of arrests has implicated three of the kingdom’s richest people with combined assets worth about $31 billion, according to the Bloomberg Billionaires Index. As well as Alwaleed, also being held are billionaires Mohammed Al Amoudi, who controls investments across Africa, Europe and Saudi Arabia, and Saleh Kamel, who operates in Islamic banking, food and real estate.

Saudi authorities estimate that at least $100 billion has been misused “through systematic corruption and embezzlement over several decades,” Attorney General Sheikh Saud Al Mojeb said last week. A total of 208 individuals have been called in for questioning so far and seven have been released without charge, he said.

“Navigating the difficulty of the political environment and the difficulty of the campaign in Saudi Arabia will present reputational issues to the banks,” said Eurasia’s Kamel. “Banks have to navigate the challenges from the legal and business perspective while managing to retain their current relationships across the region.”

Shifting Assets

Some Saudi billionaires and millionaires are selling investments in neighboring Gulf Cooperation Council countries and turning them into cash or liquid holdings overseas to avoid the assets getting caught up in the probe, people with knowledge of the matter said last week. In Saudi Arabia, some are in talks with banks and fund managers to move money outside the country, they said.

While many of the biggest Swiss wealth managers handle Middle East client money from offshore centers such as Geneva, Zurich and Singapore, some have also been building a direct presence in the region. Banks without a license aren’t allowed to market their products in the kingdom and their clients travel to booking centers.

Credit Suisse plans to hire more relationship managers in Saudi Arabia after the Zurich-based firm established a platform allowing it to offer private banking services and products in the country, it said in July. The company declined to comment on the status of these plans for this article.

The bank manages about 70 billion Swiss francs ($70 billion) of private banking assets in the Middle East, Iqbal Khan, head of the company’s international wealth-management business, said in a Dubai interview in October 2016. The bank counts the Saudi Olayan family as one of its biggest shareholders.

To read more about Credit Suisse’s Saudi Arabia plans, click here.

JPMorgan, which employs about 80 bankers in Saudi Arabia, ranks the kingdom as the 18th country where it has the most exposure, according to a third-quarter regulatory filing, with $3.8 billion in lending and deposits, and $800 million in trading and investing.

Saudi Arabia is the market where UBS has the biggest single exposure in the Middle East, followed by the United Arab Emirates and Kuwait. The bank’s net exposure to the country is 577 million Swiss francs, according to its 2016 annual report. The Swiss wealth manager plans to double headcount in the kingdom in the next few years, it said last month. Saudi Arabia is seen as a priority emerging market for UBS along with Mexico, Brazil, Turkey, Russia and Israel.

--With assistance from Hugh Son Ruth David Dakin Campbell Ambereen Choudhury and Jan-Henrik Förster

To contact the reporters on this story: Dinesh Nair in London at dnair5@bloomberg.net, Patrick Winters in Zurich at pwinters3@bloomberg.net, Archana Narayanan in Dubai at anarayanan16@bloomberg.net.

To contact the editors responsible for this story: Aaron Kirchfeld at akirchfeld@bloomberg.net, Elisa Martinuzzi at emartinuzzi@bloomberg.net, Stefania Bianchi

©2017 Bloomberg L.P.

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