Lombard Odier prioritises institutional build-out in Asia

Privately held Swiss bank Lombard Odier Darier Hentsch is seeking to hire a handful of institutional sales staff in a committed drive to build out its regional asset management business.

The firm also wants to install a long-short equities team, credit and currency analysts and a regional CIO to ensure consistency and cohesiveness to its Asian offering.

Lombard Odier is better known for its private banking capabilities, mostly outside of the region. The firm manages $158 billion in assets, of which just $7 billion, or 4.4%, is from Asian clients.

But in a sign of its intentions, this March it hired asset management specialist Vincent Duhamel as its first Asia head. Although Duhamel started in the 1980s with a private bank in Geneva, he is better known for establishing the Tracker Fund of Hong Kong that put State Street Global Advisors on the map in Asia. Most recently he was CEO of family office-cum-asset management group Sail Advisors in Hong Kong.

But now the French-Canadian Duhamel has a new project, and he is aiming to double Lombard Odier’s Asian assets under management to around $14 billion within five years.

His priority initially is to increase penetration of the firm’s pure institutional business, which at present accounts for about a quarter of its AUM globally, or $40 billion.

“When you look at the institutional business we have, that is the big driver [of asset growth], the engine of alpha for the group,” he tells AsianInvestor.

He notes that there is a war for talent in Asia’s private banking universe but says the economics don’t add up, particularly for an organisation such as Lombard Odier, which pays private bankers salaries and bonuses based on their books of assets, rather than transactional commissions.

“But the institutional side is different,” Duhamel adds. “To some extent it is built on relationships, but more often than not it is about performance and price. If you have a good idea and a solid strategy, institutional investors don’t care if you’re Goldman Sachs or Lombard Odier, they will go with the one that offers best performance, best price and best client servicing.”

He believes that institutional investment management in Asia is in a sweet-spot at present. “When I look at the kind of products we have available and the level of interest I see from institutional investors after 2008, we are at the sweet-spot. It is an inflection point for an organisation like Lombard Odier.”

Duhamel argues that building the commercial side of Lombard Odier’s institutional business will have incremental benefits in terms of brand recognition and awareness for its other businesses.

Lombard Odier has minimal third-party distribution capabilities, so Duhamel is eager to build that up. He is looking to hire up to eight institutional sales staff to cover Japan, Greater China, Hong Kong and Southeast Asia over the next six months.

On the manufacturing side, Duhamel wants to build a long-short equity team and is agnostic at this point about whether it will be Asia-focused or Greater China specialised and whether they will be based in Hong Kong or Singapore.

He is also looking to add up to three credit analysts, a couple of currency specialists and a new regional CIO.

“The idea is to adapt all the research we are doing to more of an Asian context,” he explains. “The CIO will need to contribute what is happening here in Asia to overall global portfolios, given that what happens in China has more and more impact on portfolios in Europe.

“The CIO will also need to bring consistency and cohesiveness between our discretionary management team and our investment research team. Plus they will need to go out and talk about what we are doing in Asia and in Greater China intelligently, so we need someone to act as an adviser to some of the large institutional investors in this region and explain our strategies.”

Lombard Odier has an onshore business in Singapore and Tokyo, while the rest of its Asia offices operate on an offshore basis. Asked whether it will look to set up a full branch with booking status in Hong Kong, Duhamel adds: "It is just one of those realities that if you want to be a serious player in the future, you will have to look at it."