Ultra-high net worth individuals are increasingly looking to diversify their wealth with unlisted banks due to recent troubles faced by their listed counterparts, according to Lombard Odier’s Japan head of private banking Pierre-Yves Lombard.

Geopolitical tensions are on the rise and the financial sector is not immune to such challenges. In Asia, US-China relations are a noteworthy issue. For example, banks in Hong Kong have been grappling in recent years with issues such as the contradiction between US sanctions and the risk that compliance could violate the city’s National Security Law. 

«Geopolitics are definitely a big concern for [ultra-high net worth individuals] (UHNWI) not just in Asia but across the world,» said Pierre-Yves Lombard, Lombard Odier head of private banking, Japan at the «Bloomberg Wealth Asia Summit». «I think the conflict in Europe, the conflict in the Middle East and the superpower tensions are definitely leading to clients being concerned.»

Privately Owned Wealth Managers

According to Lombard, who is an eighth-generation member of the Lombard family, clients are focused on spreading their wealth to banks that are the safest and strongest. Aside from considerations about high capital ratios and credit ratings, UHNWIs are also interested in those that are privately owned.

«I think people are looking for the banks that are not listed, especially after recent tensions in the banking market,» he said. «In some cases, they’re looking for pure plays to diversify their pool of banks.» 

Preferred Financial Centers

In addition, Lombard underlined the need for strong financial centers and he said Switzerland, Singapore and the UAE are currently seeing the highest demand from Asian UHNWIs. He also did not rule out Hong Kong as one of the fast-growing financial centers in the long term.

«Hong Kong will remain a very important hub in terms of its connection with China,» he noted. «And I think with China being the biggest market in the region, it will continue to do well […] in terms of growth going forward.» 

Japan’s Growth Story

According to a Capgemini report, Japan’s high net worth wealth and population rose 6.5 percent and 6.4 percent in 2023, respectively, making it one of the fastest-growing countries in Asia. Lombard Odier formed a timely strategic alliance with Mizuho in February last year which has allowed it to capitalize on recent opportunities. 

«The local markets have been very successful both on the liquid and illiquid side and that’s created quite a lot of demand for IPOs and businesses being bought by private equity or larger businesses,» said Lombard on how wealth was being created in the country. «We’ve been onshore for nearly four decades […] and we think Japan is a very interesting market.»