Lombard Odier's work with external asset managers in Asia is a major part of its business strategy. It spoke recently to this publication during a trip to the region.

There are plenty of calls for Swiss private banks to ditch secretive old ways and get into the modern trend of “adding value for the client”. As margins are squeezed, firms have no alternative. And whatever one might think of such business mantras, they have the benefit of truth. This certainly applies when such firms prospect for business in Asia.

So in the case of Lombard Odier, one of the Alpine state’s most recognised private banking brands, it has put innovation and tech networking front and centre of its international business strategy, it says. And the firm put plenty of hard figures and detail to back up its claims when this publication recently caught up with Yves Delaporte, the Geneva-based deputy head of external asset managers, and Vincent Magnenat, Asia head of private banking at Lombard Odier.

Both men were on an Asian road-show highlighting what they see as a crucial and potentially significant business line of providing services to external asset managers.

In Asia, Lombard Odier set up a dedicated EAM desk five years ago and today, assets booked in Singapore for such managers working with Lombard Odier represent a little under 10 per cent of the bank’s global business conducted with EAMs in terms of assets under management, which stands at $18 billion today.

The bank is bullish: By 2016, Lombard Odier expects to double the size of the bank’s global business conducted with external asset managers in terms of AuM booked in Singapore, thanks to new leads generated by word of mouth and a pipeline of networking activities involving Asia. (Singapore is the Asian booking centre for Lombard Odier, which also has offices in Hong Kong and Tokyo in the region.)

Scalable
At present, the firm oversees at total of about $8 billion of client money in Asia and some of that is enabled by Lombard Odier’s global custody platform, or G2, as it is known. It says that because of G2, its business model for working with external asset managers and other clients is very scalable.

Lombard Odier is not, of course, the only firm looking to work with EAMs in Asia, or indeed anywhere else. Deutsche Bank, Credit Suisse and Julius Baer, to name just three, work with EAMs in the region. Banks are keen on EAMs as a way to diversify product lines. One can expect competition for business to be intense, with a likely downward pressure on pricing. Back in the autumn of last year, for example, the publisher of this website looked at what private banks can do for independent wealth managers in Switzerland, issuing a 62-page report that was sponsored by Coutts. There is clearly a market for private banks to serve such firms if they can get their offerings right. Lombard Odier reckons it has valuable experience to draw upon.

“We have long-lasting experience in serving external asset managers, mainly in Europe. We are actively targeting rapid growth in its business with EAM in Asia due to dynamism in this still embryonic sector and our related global expertise dating back to 1987,” Delaporte said.

And part Lombard Odier’s strategy is using technology, including social media platforms, to tap into managers running hundreds of billions of dollars of wealth in the Asia region. It is the kind of market where an early-mover advantage is worth seizing.

Delaporte talked about the “high appetite for digitalisation” in Asia, referring to the firm’s launch five years ago in Europe of the B2B online social network to independent wealth managers to communicate with their peers around the world. Separately, last year it rolled out its 3-D “financial fair”, drawing hundreds of entrants.

The B2B network is known as E-Merging, described in Lombard Odier’s marketing blurb as “The first B2B social network dedicated to independent financial experts”. The network is present in more than 40 countries and is free of charge. It has over 1,000 members already together managing $340 billion of AuM; Delaporte called it “a professional Facebook for independent financial experts”. Because 70 per cent of the network are not yet Lombard Odier clients, it means that if a sizeable chunk do become clients, the revenue opportunities are enormous.

“It [E-Merging] offers members the opportunity to meet and work with experts from other disciplines and jurisdictions; sharing ideas and expertise, entering into business partnerships, hiring new staff and identifying potential merger and acquisition targets,” Delaporte said.

Part of the reason for why the potential for working with external asset managers is so great, Delaporte continued, is that the market is relatively young, while the European one is more mature, as demonstrated by consolidation and M&A activity in the latter.

Magnenat said the EAM work is a key business growth area for Lombard Odier. The bank is already known for its work as a discretionary fund manager; the EAM work is a nice complement to it.
He spoke of how the G2 platform gave independent wealth managers access to a single, multi-jurisdiction, multi-asset platform that is unique in the industry.

What is certainly clear is that all this talk of “virtual networks” and 3-D channels is a far, far distance away from the clichéd image of a Swiss bank nestling next to a mountain where the staff head off for long lunches. Lombard Odier may well have one of the most venerable names in European banking, but as far as these men are concerned, modern technology is right at the heart of what they want to do.