This is an audio transcript of the FT News Briefing podcast episode: ‘Saudi Arabia puts outside consultants on notice’
Kasia Broussalian
Good morning from the Financial Times. Today is Monday, March 17th, and this is your FT News Briefing. Banks are racing to manage the wealth of India’s new millionaires. And Saudi Arabia might be done writing blank cheques to consulting firms. Plus, we take a look at a weird quirk that’s upending the global gold trade. I’m Kasia Broussalian, and here’s the news you need to start your day.
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HSBC and UBS are expanding their wealth-management operations in India. The country is one of the fastest growing economies in the world and has been minting a lot of millionaires lately, thanks to a record year in new listings. And where there’s wealth, there are wealth managers. For Switzerland-based UBS, expanding in India means trying to acquire shares in 360 One. That’s one of India’s largest wealth-management companies. As for HSBC, it’s promised to nearly double the number of branches it runs in the country. The global banks will have some tough competition, though. Local wealth managers have also been getting in on the action with clientele lists growing year after year.
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A consulting boom in Saudi Arabia is starting to peter out. Western firms were raking in cash from advising the kingdom on projects to diversify its economy. But now Riyadh is having second thoughts and it doesn’t have as much money to throw around. The FT’s Chloe Cornish is here to explain. Hey, Chloe.
Chloe Cornish
Hello.
Kasia Broussalian
So can you just give me some more background on this surge in consulting who’s involved and what was really driving it?
Chloe Cornish
Consulting firms have been one of the big beneficiaries of a huge transformational economic diversification drive in the Kingdom of Saudi Arabia. This massive transformation of Saudi Arabia needs a lot of advice. Some of these projects are really, truly world firsts. So-called mega projects or giga projects like Neom, the new economic area that Saudi Arabia is creating. Consultancies like McKinsey, BCG, Bain have been on hand to help shape a lot of these plans and then provide a lot of manpower for government ministries that want to beef up their workforces because they’re trying to do so much stuff at once. They don’t have necessarily the capability or capacity within ministries themselves to get everything done.
Kasia Broussalian
Yeah, just give me a sense of scale here. Like, how big has this boom really been for some of these major consultancy firms that you just mentioned?
Chloe Cornish
After the pandemic or the worst days of the pandemic, the market has really just boomed. You had 38 per cent growth in 2022, over 20 per cent growth in 2023. That has been a great help to consultancies who have slower markets in other parts of the world. To give one example, PwC’s revenue growth last year in the Middle East region, it was 26 per cent compared to just 3 per cent in the UK. So you can see how that growth has been a really big help to consultancy firms.
Kasia Broussalian
Got it. So you have these consultancy firms coming into Saudi Arabia and really benefiting from the country’s drive to diversify its economy. But why are officials in Riyadh pulling back on some of those services now?
Chloe Cornish
There is a bit of a confluence of things here. So on the one hand, officials in Riyadh are feeling somewhat like they might not be getting value for money for the consultancy services that they have spent hundreds of millions of dollars on. The other thing is the oil price has fallen, and many analysts expect it to continue to do so. And that is not helpful for Saudi Arabia, which is a major oil exporter. So there’s just less money for the government and budgets have been constrained somewhat. That is the context in which the sovereign wealth fund of Saudi Arabia, the Public Investment Fund, put a ban on PwC getting new work for a year. That ban was an event that really sent shockwaves through the consultancy industry in the Middle East.
Kasia Broussalian
And how are these consulting groups responding?
Chloe Cornish
We hear from consultants in the region that some of them are cutting prices now to try to make sure they’re still getting work in Saudi Arabia. This is also partially because competition between the consultancies has grown a lot. There’s still growth in the consultancy market in Saudi Arabia. It’s just that it’s 14 per cent this year rather than 38 per cent, you know, in 2022. And whenever you get more choice like that in a market, you’re going to see it become what’s called like a buyer’s market. So the buyer of the services has more power to dictate the price than the firms delivering those services.
Kasia Broussalian
Chloe Cornish is the FT’s Gulf business correspondent. Thanks, Chloe.
Chloe Cornish
Thank you.
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Kasia Broussalian
US shoppers are starting to tighten their belts. A lot of retailers are warning about slower growth and even declining sales in 2025. One reason is that foot traffic to US stores seems to be falling. According to cell phone data, fewer people have been visiting the big box stores like Walmart, Target and Best Buy. And on Friday, the University of Michigan’s Consumer Sentiment Index reported its third consecutive monthly drop. Inflation has already burned holes through household budgets. But now people are worried that President Donald Trump’s tariffs could keep prices high. It’s all a big deal because consumer spending is a key driver of growth in the US.
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An American gold rush is keeping refineries in Switzerland running all night. Investors have been worried that Donald Trump might slap import tariffs on the shiny metal. And even though the US president has never actually made that explicit threat, people are moving their stores from London to New York. Here to tell me how that’s upended the market is the FT’s Leslie Hook. Hey, Leslie.
Leslie Hook
Hey.
Kasia Broussalian
So just explain to me what’s happening here. First, how much gold is actually coming into the US?
Leslie Hook
Well, since Donald Trump’s election in November, there’s more than $61bn worth of gold that has flowed into basically a giant stockpile in New York. The reason all this gold is flowing into the US is that traders are afraid Trump might put tariffs on gold. Now, london is actually the centre of the physical gold market. That is where most of the bullion changes hands physically. And New York is the centre of the gold futures market. But what happened when the market started getting jittery about tariffs is that we saw the price of New York gold futures being higher than the price in London. And to take advantage of that, arbitrage traders started bringing metal over.
Kasia Broussalian
But now, why does the gold actually need to go through Switzerland in order to get from London to New York?
Leslie Hook
Well, the strange thing about London and New York is that they use different sizes of gold bars, and for some reason this persists despite the obvious inefficiency. In London, the standard size is a 400-ounce bar. It’s kind of the size of a brick, and it weighs 12.5kg, so it’s really heavy. And in New York, the standard size is a 1kg bar, which is about the size of your iPhone. It’s smaller, it’s more convenient. And so when the bars are brought over, they actually have to be melted down in Switzerland and recast into 1kg bars before they’re flown to New York.
Kasia Broussalian
Well, what’s kind of crazy to me is that I usually think of big financial transactions as being more of a, you know, a tap on the keyboard. So why does gold need to be physically moved?
Leslie Hook
Well, that’s a really good point because gold is very much a physical commodity. You know, it’s a physical property. And I think that’s one reason why investors are turning more towards gold in this time of uncertainty, time of geopolitical tension, time of trade wars. I mean, late last week, gold prices hit a record high. You know, the fact that gold is a physical thing — it doesn’t rely on the government to really give it value — is really attractive to investors right now.
Kasia Broussalian
And what’s the process like? So when you say that it’s getting resized in Switzerland, what exactly does that look like?
Leslie Hook
Well, I visited the Argor-Heraeus refinery in southern Switzerland, which was fascinating. And when gold comes in, first it gets tested and melted down and poured into small moulds that are approximately a kilo and then polished. There’s the weight-adjustment process. Takes about three days from the time that it enters the refinery to the time that it leaves.
Kasia Broussalian
I’m getting like a Lord of the Rings vibe. I’m thinking of, like this luscious metal that’s flowing into some sort of mould, and it all sounds like an incredible amount of work for a threat that hasn’t materialised quite yet, right? I mean, Trump has not made any of these threats for tariffs. So what are these moves here doing to the gold market more broadly. And do you see it continuing?
Leslie Hook
Well, that’s a really interesting question because right now the market is really calming down and the flow of gold into New York has become much, much slower. It’s sort of gone down to just a trickle at this point. I think over time, most traders expect that this gold will make its way back to London, because it’s simply much cheaper to store gold at the Bank of England, and the London marketplace is the most liquid physical market for gold in the world. So as things calm down, the gold is likely to make its way back to London and it will have to be refined in Switzerland again as part of that process.
Kasia Broussalian
All right, so the Swiss refineries still have some business ahead of them, it sounds like.
Leslie Hook
Lots and lots and lots.
Kasia Broussalian
Leslie Hook covers natural resources for the FT. Thanks, Leslie.
Leslie Hook
Thanks, Kasia.
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Kasia Broussalian
And finally, it’s no secret that education is a top priority for a lot of parents in South Korea, but this latest stat really caught my attention. Nearly half of all preschoolers in the country are now in so-called cram schools. These are private education centres that a lot of students attend on top of regular schooling. They teach things like English, math and science. And almost a quarter of kids under two are even enrolled. Parents spent $20bn on private education last year, a record amount. And the cost, plus the intense competition is putting a lot of pressure on households. Experts say it might even be why so many couples in South Korea aren’t having kids in the first place.
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You can read more on all of these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.
