Lombard Odier, Switzerland’s oldest private bank with $281 billion in assets under management, is launching Islamic products in the Arabian Gulf as it plans to expand in Abu Dhabi next year and establish a foothold in Saudi Arabia.
"We are planning to strengthen our presence in Abu Dhabi to start with … it is absolutely key for us," Arnaud Leclercq, Lombard Odier's group managing director said in Dubai. "We are [also] contemplating a partnership in Saudi Arabia," he said, declining to give further details about its venture in the kingdom.
The decade-old representative office in Dubai, its sole presence in the region, operates under the licence of Central Bank of the UAE. The bank plans to seek another licence to set up an office in the capital, and may consider the emirate's international financial hub Abu Dhabi Global Market as its base, Mr Leclercq said.
The Islamic financial industry is growing globally and in the region as governments seek to capture a greater slice of the banking industry and investors target this nascent sector. The industry is forecast to reach $3.8 trillion by 2022 from $2.2tn in 2016, according to a report published last year by Thomson Reuters and Islamic Corporation for the Development of the Private Sector.
Lombard initially invested $10 million of clients' funds in Islamic products back in 2012 and has so far deployed "a few hundreds of millions of dollars" into what has become Lombard's complete suite of Sharia-compliant products, Mr Leclercq said, declining to give the exact amount invested in Islamic space so far.
The the capital deployed in Islamic products by Lombard in the next few years is expected to grow.
"We see demand, we see very strong interest and in few years time, we should be close to $1 billion," Mr Leclercq said.
The bank, which has doubled the personnel in Dubai in the last five years, plans to hire more staff in the UAE, as its expands and as demand grows for its Islamic investment products.
The 222-year old bank earlier this year received Sharia certification from the board of Amanie Advisors, a Malaysia-based Islamic finance consultancy, Christophe Lalandre, the managing director of Lombard's Dubai office said.
“Given Lombard Odier’s history in the region, Sharia-compliant offerings display our commitment to growth in the UAE, which is among the strongest markets for Islamic finance,” Mr Lalandre said.
The asset manager has been covering the broader Middle East markets for more than 50 years from its base in Switzerland. The UAE office, however, has primarily focused on the GCC markets and that will continue to be its core operations, Mr Leclercq said.
In the last three years, Lombard has seen growth in the demand for Islamic investments products particularly, in the UAE, Kuwait and Saudi Arabia, the region's biggest economy.
The suite of products that Lombard offers includes sukuk, which are selected from the entire universe of the Sharia-compliant debt instruments, equities, which are part of the MSCI Index, and investments in “thematic funds”.
The bank is primarily managing assets on behalf of high net worth individuals in the region. It is now engaging family offices.