The departing chairman of the Swiss Bankers Association, Patrick Odier, says in an interview with finews.asia what he now wants to do with «his» bank, Lombard Odier. Technology and the expansion of the business in Asia and Europe are the central elements of his strategy.
Mister Odier, the venerable institution of Lombard Odier private bank seems to mutate into a fintech company for third parties. Is that your ambition?
No. Lombard Odier isn't mutating into a fintech company. Rather, we rearranged the business model to rely on several pillars of income, which is paying off in difficult times, as has been proven again. Our technology and banking services to third-party customers are one of those pillars. The fact that this business is successful proves our strategy right.
With our technology platform we participate actively in the consolidation of the banking industry as other institutes use our services. Accordingly, we have a large pipeline of important customers. Currently we work on the technological integration of Luxembourg's KBL Group.
The cost-income-ratio rose to 83 percent from 80 percent in the first half of 2016. You've explained that this increase was due to a boost in investment. Could you elaborate on this?
We created about 100 new jobs in our technology unit alone, mostly in Geneva, but also abroad. We are also continuously hiring relationship managers, domestically and internationally in those places, where we are active.
«We are sticking to our investment strategy»
Furthermore, we also invest in better allocation solutions and advisory services. The cost-income-ratio is forcibly up, given the moderate development of revenue coupled with an unchanged level of costs. But we are sticking to our investment strategy.
The Asian market is an important business at Lombard Odier, with representations in Hong Kong, Singapore and Tokyo. The stock markets in China collapsed at the beginning of the year. How has your business in Asia fared since?
We are satisfied, even if the development has indeed slowed down. But that doesn't affect our target, because we always applied a rather defensive strategy in Asia. We never did single-stock-lending, never pushed Lombard credits or banked on the highest possible transaction return.
Instead?
We favor discretionary wealth-management mandates and have an above-average share of such clients. In Asia, we are something of a «rainy weather fund», which achieves an excellent performance under exactly the difficult market environment – better than many competitors.
«First-class financial products for the middle and upper classes in Asia»
What are your plans for Asia?
We have entered cooperations with local Asian banks for a number of years, for instance in Thailand, South Korea, Japan, China and most recently on the Philippines. Together with our partners, we are able to offer the strongly growing middle and upper classes in those countries first-class financial products that local institutes don't have.
Why does it work?
Local banks don't necessarily want to cooperate with big global banks, but with institutes of their own size as equal partners. In that respect, we have the ideal size. Adding to that we have the most modern technology and centuries of experience in private banking. Our target is clear: we want to have more of those cooperations.
Back to Switzerland: under what conditions will Lombard Odier pass on negative rates to its customers?
We said a year ago that as a classic private bank we won't be able to keep the entirety of the clients' assets on our books. Fundamentally, we would have to pass on the negative rates to our customers. But we have at the same time developed corresponding investment solutions to enable our clients to avoid negative rates – at the same risk. For wealth-management mandates we don't charge negative rates out of principle.
«Looking for partners isn't on the agenda»
Today you are six partners at Lombard Odier. Are you looking for further owners?
There is no specific number of partners at Lombard Odier; and we don't have any guidelines for this. We are currently happy with this setup, and therefore is the look for partners not on our agenda.
You will be giving up the chair of the Swiss Bankers Association in mid-September. Will you then be devoting more time to the bank again or are you planning to withdraw?
No, I have no intention whatsoever to withdraw. On the contrary, I want to actively help shape the further development of the bank. In the past seven years, as chairman of the Swiss Bankers Association, I did so much for the Swiss financial market that it may indeed be high time to be a little egoistic and to take care of «my» bank and its clients.
