|The Bahamas Investor Magazine
June 23, 2009
June 23, 2009
“The commercial outlook is bleak indeed, with one disaster following another. The London market has been rocked by huge bankruptcies. One cannot predict the extent of the repercussions. This crisis has been foreseen for a long time and it has at last arrived with great intensity… . It is at times like these that one appreciates the advantages of having acted with moderation.”
These are the words of Alexandre Etienne Lombard. Although it could have been written yesterday, the date is September 1847. More than 160 years later, the exact same sentiment is echoing around the global economic community and Geneva’s oldest private bank, Lombard Odier Darier Hentsch Private Bank & Trust Ltd, is still a growing business.
Christian Coquoz, managing director at the Nassau arm of the Swiss bank, believes it is the same qualities that saw Lombard Odier through the crisis of 1847 that will see it through the current one. “Swiss bankers have a reputation of being conservative. Some say we are too old-fashioned,” he says. “But now that is exactly what people want. We have acted with moderation, taken no undue risk and kept the long-term view always in mind.”
Wealth for generations
This is partly a result of due diligence on the part of Lombard Odier’s private bankers not to be seduced by high risk, high return instruments but, unlike some larger banks, it is also intrinsically interwoven with the business model of the organization. Founded in 1796, Lombard Odier is a seventh generation family business that has grown to offer its private and commercial clients a wide range of advisory services in wealth management, financial products and specialized areas. It is an independent private bank that is owned and managed by eight partners with unlimited liability, which means the prosperity of the bank is intimately entwined with the continued financial health of its clients. Consequently, it has no external financing, no shareholders and no toxic assets.
“All the managing partners are very involved in the running of the bank,” explains Coquoz, a Swiss national who came to The Bahamas in 1993 and joined Lombard Odier ten years ago. “They are liable and responsible for the well-being of the company, not just the capital reserve of the bank but the everyday running of it as a business. They are private bankers in the true sense of the word.”
This depth of involvement and longevity breeds confidence in customers even when fear reigns in the economic arena. Laurent Colli, head of private banking in Nassau, notes that there has even been a marked increase in interest in the Swiss bank since the global economy plunged south half-way through last year.
Reduced exposure to risk, bonds over equities, government bills, gold as an asset of diversification and other such stable investments are the order of the day, according to Colli. “Everyone is walking on eggs at the moment,” he says. “We are definitely placing an emphasis on capital preservation.”
This is something the bank’s customers value at this point. “These are extraordinary times and people are losing money,” continues Colli, who was a broker on Wall Street before joining Lombard Odier in 2000. “You would think clients would be angry at the bankers, but with us, it has proven to be the opposite because they know that we are trying to protect their wealth. They truly understand the impact and the difficulties of navigating these waters. I think our clients feel reassured as they don’t expect to make money right now but they are aware that we are preserving what they have. It is about knowing what makes the client happy.”
Matter of trust
After all, at the end of the day, that’s what wealth management is all about: knowing what the client needs even better than they know themselves. This is no more true than on the trust side of the business.
Charmaine Tucker, head of trust and corporate services at the Nassau office of Lombard Odier, is an expert in nurturing and maintaining relationships. “We are preserving the wealth for generations of a family, so a trust is not a contract; it’s a relationship,” she says. “You have to be personable because you deal directly with the clients and client service is the key to our business. You have to cater to their specific wants.”
Tucker says that it is necessary to spend time with the client to understand their needs, even visiting their homes for the weekend or going on extended trips. Only when you know everything about the client’s hopes and wishes can you tailor a financial vehicle to suit the individual. “Everything we do is totally customized,” says Tucker. “You would never get a ‘tick the box’ type of trust or template vehicle from us. Each one is a designer’s original.”
Quality of service
To get this quality of service, employee skill levels are essential, as is their attitude. “You have to have the complete package. Education and experience are important but you have to have potential and the right attitude,” says Coquoz, who has overseen the expansion of the Nassau office from a team of 10 in the late 1990s to over 30 now. “You have to fit in with the team but also with the vision of the whole group. Our expansion here has been possible because of the quality of people and their willingness to learn. Although it is never enough, I am impressed by the excellent pool of qualified staff available in Nassau.”
To cultivate understanding of the corporate culture, the bank sends employees to work for extended periods in Geneva and supports their involvement in company events such as ski trips and the annual party at the head office. This is all part of a wider staff development and training programme that has seen local employees become the key players in the success of the whole Nassau operation, with five of the bank’s six departments now headed by Bahamians.
Niekia Horton, the first Bahamian female chief operating officer at Lombard Odier, is in charge of the day-to-day running of five units: finance, operations, logistics, human resources and IT. “Giving people the opportunity to maximize their potential is key to developing staff.” says Horton, who has been in the role for nearly two years. “The establishment of smart objectives is important for people to know what needs to be accomplished and how to work towards it. Our people are hard working and committed to providing our clients with top quality service.”
Such efforts breed a close-knit work environment. “People stay for a long time with Lombard Odier and we work hard to retain the right people,” says Coquoz.
The continued success of the Nassau office is not only a reflection of the bank’s commitment to the country but also of what The Bahamas has to offer. When Lombard Odier first came here in the 1970s, Europe was facing social and economic problems. At the height of the cold war, tensions between the east and west led some wealthy families to look further afield to protect their assets.
Originally Lombard Odier’s involvement in the jurisdiction was only as a booking centre with assets being handled out of Switzerland. But in the 1980s the bank realized good business could be done down here and it expanded private banking, trust and fund administration services. Since then, Lombard Odier has grown in tandem with the jurisdiction’s legislation to offer a full investment advisory portfolio as one of the bank’s network of 23 offices in 17 countries around the world.
Even in these times of economic contraction and increased compliance regulation, the bank remains bullish, planning further expansion at the Nassau office over the next five years. “Lombard Odier has more than two hundred years of experience and we have been through many types of crises, from the French Revolution to the world wars and the Great Depression. We have survived through moderation,” says Coquoz, echoing the words of Alexandre Etienne Lombard. “Many larger banks face huge uncertainties and will have to adapt their business. But we will not have to modify what we do. Rather people’s thinking is now coming closer to what we have done all the time. There is a saying in French—cela a remis l’église au milieu du village—it puts the church back at the centre of the village where it is supposed to be. In other words everything is back in its right place.”
Two centuries of innovation
1796 Foundation of Hentsch & Cie by Henri Hentsch
1798 Henri Hentsch and Jean Gédéon Lombard establish the bank Henri Hentsch & Lombard
1800 Financiers of the mining industry
1857 Co-founders of the Geneva Stock Exchange (20 years before the opening of the Zurich Stock Exchange)
1872 Creation of Geneva’s first life insurance company by James Odier and Jules Darier-Rey
1880 Participants in financing the Swiss railway network
1907 Co-founders of the Swiss National Bank
1919 Establishment of a pension fund for the firm’s employees
1950 Pioneer in creating and distributing mutual funds in Europe
1951 First private bank to set up outside Switzerland (Montreal office opened)
1957 Installation of the firm’s first IT system
1979 First European bank to own a seat on the New York Stock Exchange
1979 Nassau offices open
1993 Participants in setting up the Swiss Electronic Exchange
1995 Launch of first sectoral fund in collaboration with scientific experts
2002 Lombard Odier Darier Hentsch & Cie comes into being