Article first published in Citywire Asia on 26 February 2024. Please find an excerpt of the interview below:

It isn’t easy to gain critical mass in a region grappling with increasing costs and a floundering Chinese market. For Lombard Odier, the ability to stay agile and focused has helped it navigate and flourish in the Asia-Pacific region. And this has come with the realisation and acceptance that the bank cannot offer everything its competitors offer, Lombard Odier’s regional CEO Vincent Magnenat says.

“In Asia, having a clear value proposition and having the discipline to stick with it is more important than your size. In fact, you can be profitable without being big,” he says.

According to Magnenat, pure-plays have the advantage of not needing to provide commercial banking services like financing and mortgages. This allows them to focus on managing client money, providing advice to families, and on goal-based investments.

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Going Onshore

For Lombard Odier, its six strategic alliances to capture Asia's explosive wealth growth beyond the offshore centres of Hong Kong and Singapore have been key. It is what Magnenat refers to as its ‘onshorisation’ strategy.

“This ‘onshorisation’ strategy, coupled with the fact that we are privately owned and that we accept we do not want to be everything to everyone in Asia, is how Lombard Odier stays nimble. It differentiates us from the rest,” he says.

Since 2015, the bank has tied up with local financial institutions in Asia, including Kasikornbank Private Banking in Thailand, Mizuho Financial Group in Japan, Mizuho Securities (Singapore), Taipei Fubon Bank, UnionBank Private Banking in the Philippines, and JBWere in Australia.

Combining strengths with local banks that are leaders in their own markets also removes the operational costs of setting up shop in various jurisdictions – a strategy that some private banks have adopted for better reach.

“[Wealth] will also grow in markets like Thailand, the Philippines, China and India, where offshore centres will not be able to provide tailored solutions for these markets. The future is onshore,” Magnenat says.

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Private assets and sustainable investments

While Lombard Odier, like many other private banks, has struggled to tempt clients away from the 5% returns available via cash management solutions, the bank says it is seeing interest in private assets and sustainable investments.

“Overall, we believe that sustainable investments will generate superior returns in the future. Key stakeholders, including politicians, regulators, and consumers – as well as technologies such as solar energy and electric vehicles – are behind it,” Magnenat says.

He adds that there are also an estimated USD 4 trillion to USD 5 trillion of opportunities in the transition to a Circular, Lean, Inclusive and Clean (CLIC®) economy.

There has been interest in private assets too, and this has prompted the bank to build an allocation that blends different assets and vintages, including private equity, real estate and infrastructure for diversification.

Read the full interview on Citywire Asia