|The Bahamas Investor Magazine
July 23, 2015
July 23, 2015
Like its 219-year-old parent company, Lombard Odier & Cie (Bahamas) Ltd knows all too well that self-preservation is key to wealth preservation. One of the best capitalized banks in the world, the Swiss private bank Lombard Odier Darier Hentsch is Geneva’s oldest and second largest wealth manager.
With no external debt and $162 billion in assets under management in 2014, the independent bank seemingly has the financial wherewithal and superior global wealth management expertise to weather any economic storm. Its 36-year-old Bahamas-based operation is doing well to follow in its footsteps.
The Bahamas arm of the business was established in 1979 as a small bank, functioning mainly as a booking centre with assets managed out of Switzerland. Since then, the business has continued to add on services and has operated without interruption, says Marc Lopez, Lombard Odier Group’s managing director.
“Initially The Bahamas office was born out of European efforts,” says Lopez, who joined Lombard Odier in 2008 and was appointed a limited partner in 2011. He is also a member of the Private Clients Management Board. “The jurisdiction continues to be very attractive for us.”
As Lombard Odier seeks to expand its footprint into Latin America, The Bahamas, which presently provides a range of services in wealth management for private and institutional clients, has a new and vital role to play in the Swiss bank’s strategy.
“We intend to utilize The Bahamas to expand our services throughout the Caribbean basin,” says Renaud Vielfaure, managing director of Lombard Odier Bahamas. The bank, he says, has its own “strong base” of clients which has fuelled its growth in size and performance over the decades.
Building on this, The Bahamas operation’s 35-strong team is being called upon to help support expansions in Panama, which commenced in 2013, and in another location in South America yet to be publicly announced.
“The Nassau office will provide logistic, investment and technology support to our efforts in Central and South America,” adds Lopez. “The Bahamas will continue to be even more important for the group, given our expansion in Latin America.”
Well-placed, high-quality team
The Bahamas’ “high-level” of human resources, coupled with market opportunities, are just a few of the reasons why Lombard Odier remains committed to the jurisdiction, says managing partner Christophe Hentsch. “The Bahamas can be a hub. It has a good background, the right people and the right knowledge,” adds the Swiss economist, who joined Lombard Odier in 1999. After running the Global Custody Department and having major responsibilities within the Private Clients Unit, Hentsch was appointed managing partner in 2004. “It’s not enough to want to serve your clients. You need local, quality people and we have found them. If you have a stable, high-quality team you are well placed to serve your clients.”
This is becoming increasingly important in a complex, dynamic global private banking environment. Long gone are the days when investing was easy, says Hentsch. In the past, investors could buy a few stocks and wait for the value to climb, but today it is much more complicated with certain zones developing at a much slower pace, he says.
To provide clients with up-to-the- minute financial advice, Lombard Odier not only draws on the expertise of its local team, but also that of a larger network of economists, analysts and high-level asset managers in Geneva, New York and London. “We can safely say we match the highest international standards in terms of our offering of products and services,” says Vielfaure.
After 36 years in the jurisdiction Lombard Odier says it’s vested in The Bahamas. “We consider ourselves as a local player,” says Lopez, “not only for The Bahamas itself, but for the Caribbean.”
Not many family businesses made $121 million in consolidated profit last year, but across its main business lines Lombard Odier did. The group is organized around three main areas of activities: private clients business, asset management, and technology and banking services. With a network of 26 offices in nearly 20 countries, employing 2,100 people, the business strategy behind the seventh generation wealth management firm originates from its eight owners and managers, of which Hentsch is one. His father and grandfather before him played an active role in the company’s management.
“Don’t underestimate the importance of independence,” he says. “This allows us to take a long-term view. If you have outside shareholders, if you borrow money, if you have to publish high- level results every three months, then inevitably, your only strategy can be to maximize profits on the expense of your clients.”
Hentsch, a seventh generation owner, says his priority is not solely concentrated on turning a profit, rather it is also about developing and preserving Lombard Odier to pass it on to the eighth generation of owners.
“We have developed and constantly adapted well because we are a family business. We have a company within families. Within close families there are common values and a common approach,” says Hentsch. “Our strategy is not what is going to happen in three months for immediate profit. The planning model is what’s going to happen for the next generation.”
That family ethos also accounts for how the global wealth management firm attracts and retains its clients in an ongoing fight to secure market share. Lombard Odier taps into new business through membership in key family business associations, such as the Family Business Network International (FBN-I), a network which encompasses over 6,000 family members in more than 50 countries.
Lombard Odier is also a member of Les Henokiens, an association which brings together dozens of prominent European and Japanese family businesses noted for their longevity (at least 200 years in existence) and robust financial health.
“The biggest majority of companies in the world are, in fact, family businesses. They all have the same question that anybody has when they have wealth: ‘How can you transmit the company, or the wealth, to the next generation?’” says Hentsch. “We have commissioned and published research about this. This is a way of creating the network and getting your market share in a very targeted way. We use very narrow channels to go to different types of clients. We are not in the retail business at all. We don’t target masses of clients.”
Securing market share
A client-centred approach to doing business, excellent fund performance and staking out a strong leadership role in financial technology helps to distinguish the company from its competitors, according to the Lombard Odier executives.
“Securing market share is the reason why we get up every morning and we go to the office,” says Hentsch. “Happy clients bring more clients. We love what we do. We love this company.”
With a client-centred approach to business, the private bank works to keep abreast of clients’ needs and any changes to those needs. As clients become more sophisticated when it comes to analysing their portfolio’s performance, transparent reporting is crucial.
“Clients seek transparent types of investment and a clear approach. They want to understand exactly what is done and how it’s done and where the performance came from,” says Hentsch. “We have adapted to have an extremely accurate reporting method for our clients; an extremely fine way of tracking their performance and risks in their portfolio. And we only recommend investment for our clients that we understand and would be prepared to invest in ourselves.”
With an extensive wealth and estate planning team based in Geneva, Lombard Odier keeps the expertise unified and provides support to private bankers in other parts of the world. Good public visibility comes directly and indirectly to Lombard Odier whether through its funds performing extremely well, hosting informative presentations, funding studies, or publishing books. Collectively, it all works to further cement the company’s role as an industry leader and innovator, the board says.
“We have such a high level of technology that a number of banks have decided to fully rely on the systems of Lombard Odier … to be powered by Lombard Odier,” says Hentsch. “Because we have this very good technology and very efficient back office, with very reliable people, there are some companies that have asked us to do their IT work. That is a way of gaining market share and financing research and development for the platform.”
When it comes to nurturing client relationships Lombard Odier stands out, says Lopez, adding that it does not carry any conflict of interest within itself. It also boasts a very low rate of staff-turnover, which helps to develop trust. Clients often stay with the firm for well over a generation as Lombard Odier’s interests are aligned with that of its large and family clients, who are concerned with stability and the preservation of wealth for generations to come.
Although an established, independent family bank, Lombard Odier says it offers investment services and products rivalling those offered by the largest modern conglomerates.
“It is the old world and the new world coming together for our clients, which I think is a key factor of differentiation,” says Vielfaure.