Swiss scion targets Middle East
Patrick Odier knows about families and money; he is a seventh generation member of one of Switzerland’s oldest banking dynasties, part of the firm of Lombard Odier founded in Geneva in 1796 and he thinks his bank’s experience can be a lesson for the Arabian Gulf region’s merchant families.
“We know how to bring families together round a table to manage the common family wealth. We have done that for many years,” he says on a visit to the UAE.
The family-friendly approach is one of the selling points Lombard Odier is using in its push into private banking, wealth and asset management in the region. Like other Swiss banks, the firm sees the attraction of the pool of high net-worth individuals (HNWIs), big wealthy family firms and sovereign wealth funds in the region.
With Abu Dhabi widening its non-oil economic base to include greater emphasis on the financial sector among others, the country is attracting growing interest from banks seeking to grow their local presences.
At the same time, the changing nature of the global private banking business, subject to increasing commercial and regulatory pressures in its traditional US and European markets, has led to a new focus on markets in developing areas to the east, especially Singapore.
The Middle East is seen as the perfect stepping stone to that new business, as well as a business-generator in its own right.
Lombard Odier has had a presence in the region for 50 years but opened a full-time office in Dubai in 2007 as a sign of its commitment to the Gulf.
“Now we have an established presence here,” says Mr Odier. “Clients from round the world are converging through Dubai, which is so well equipped and has the credibility to be a regional base.
“We like financial centres where the top names in industries are concentrated,” he says. “The demand is certainly here for our type of services.”
For Lombard Odier, wealth management consists mainly of protecting existing wealth against risk through varied hedging techniques.
One of these risks is the potentially wealth-destructive effects of a change in generational management and control of a family business, so one of the firm’s specialities is managing the transmission of wealth from one generation to the next.
“We offer the full range of legal, fiscal and patrimonial advice, which is pretty much the same anywhere in the world. Families have got to have the means to continue to invest,” Mr Odier says.
Some big families in the region are increasingly looking at going public on a stock market via an initial public offering to ensure smooth transmission but Mr Odier is not entirely convinced that is the best way to proceed. “They hand over some control to the market and also some privacy. For some, the continuing privacy of their business can be an objective in itself. On balance, I’d advise against IPOs.”
One alternative is a private partnership with investment from private equity investors, he says.
Typical clients in the region are families who earned their wealth through the entrepreneurial activities of a founder many years back.
They have a business side and a private side of family offices.
Other, and potentially more lucrative clients, are the big investing institutions and sovereign wealth funds (SWFs) the region has produced.
Lombard Odier can offer these a range of investment strategies designed to hedge and minimise risk, which is an SWF priority.
The essential rule of investment for Lombard Odier is to be flexible in asset allocation for its clients.
In an era of low interest rates, falling commodity prices and uncertainty on some fixed income investments, the firm will adhere to its risk-minimisation principles to produce balanced portfolios.
“For Middle East investors, the main attraction is European and Asian investment, where our skills are appreciated. In European equities, where there is something of a recovery going on, stock selection is more important than ever.
“The sectors that might be regarded as boring, like utilities, are still very interesting for us,” Mr Odier says.
The global regulatory scene is changing for the private banks and wealth managers and this has big repercussions for banks such as Lombard Odier.
The legendary “secrecy” of Swiss banks has come under fire from authorities in America and Europe and, while private banks there will have to adapt, Mr Odier says the country remains an important part of the world financial scene.
“Switzerland will continue to play a central role, in fact that role increased during the financial crisis because big investors were looking for stability.
“That is what we offer above all. The complementarity between Switzerland and Dubai has increased because of this.”
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Published: December 14, 2014 04:00 AM