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Muscat - Founded in 1796, Geneva, Switzerland-based Lombard Odier is a leading global wealth and asset manager, focused on providing solutions to private and institutional clients. The bank considers the Middle East and the GCC region the fastest growing market for increasing its assets under management.
Patrick Odier, chairman of the board of directors at Bank Lombard Odier & Co Ltd, was recently in Muscat. In an interview with Muscat Daily, he talked about bank’s activities in Oman and the GCC, its growth potential and business outlook for wealth management in the region.
Lombard Odier is an over 200 year old bank. Can you elaborate on its current size and global reach?
Lombard Odier is a private independent bank which is owned and managed by six partners. The bank is primarily dedicated to wealth management, however, we are involved in three core activities: Private clients, asset management, and technology and banking services. The bank’s total assets under management currently stand at over US$230bn.
Through private clients services we provide wealth management offerings to family enterprises and high net-worth individuals across the world. Private clients account for nearly half of our total assets under management.
The second core activity is asset management overlooking institutional requirements such as pension funds, corporate treasuries, sovereign wealth funds and multinational corporations. The asset management division accounts for approximately a quarter of our total assets.
Our third core activity - technology and banking services - was developed over the past 10-15 years to adapt to the changing needs of our customers offering technological solutions in our banking infrastructure. We offer flexible and efficient IT and banking services to private banks, instructional investors and family enterprises catering to specific business needs.
Currently Lombard Odier Group employs around 2,300 people. We have 26 offices in 19 jurisdictions including London, Paris, Milan, Zurich, Moscow, Dubai, Hong Kong, Singapore and Tokyo. Lombard Odier enjoys very high liquidity and no external debt. Our balance sheet today is among the strongest in the financial world.
Tell us about Lombard Odier’s presence in the Middle East? How important are the GCC markets for you?
Lombard Odier has been serving clients in this region for the past 50 years. We launched a regional office in Dubai ten years ago and since then, the bank has been able to consistently grow its presence across the region. Over the past ten years, we have recorded an average annual growth rate of approximately ten per cent in the GCC. The growth rate for the wider Middle East is also in line with our growth in the GCC.
With consistent year-on-year growth I would say the GCC has become an important area for our business. We have found there is a strong appetite for creative investment solutions in this region. More recently, we are receiving requests to develop offerings for Sharia complaint portfolios, and while we are looking to develop Sharia complaint mandates to meet demands of potential clients, it is a challenge under the present low yielding environment.
We have expertise in developing new concepts for clients interested in sustainable finance and sustainable investment strategies. We recently launched green investment bonds in collaboration with a firm called Affirmative Investment Management. The development of Sharia’a compliant mandates for us would therefore be in line with our efforts in bringing sustainable value to investment solutions.
How significant is the Oman market in your regional operations? What growth prospects do you see here?
We are playing an active role in Oman by increasing awareness of international investing and the benefits of diversifying investments. With the current challenging economic environment, we see a growing willingness here for the diversification of investment portfolios.
With the impact of low oil prices, GCC investors have become more sensitive about returns on investments. They are increasingly showing an interest to diversify investment risks. We offer solutions to our clients to help them diversify investment portfolio.
Oman offers a relatively sophisticated environment for the development of professional investment solutions and financial skills. We are interested to extend contacts with local Omani institutions like banks and pension funds to bring concepts of international diversification and risk management. There is a growing interest in Oman for these type of solutions and we see a high growth potential in the Omani market.
How did lower oil prices affect your business in the region?
We focus on a long-term view on the GCC markets. The economic slowdown has opened the eyes of GCC investors to the importance of risk diversification. They are recognising the importance of globally diverse investments rather than limiting to local markets. With a prevailing low yield environment people are showing interest in alternative sources for higher yield.
We work closely with our clients to integrate the current market environment into a long-term view. The potential of the GCC region appears to be very positive with this approach.
The GCC countries, including Oman, have developed a stable and balanced regulatory environment and are well positioned to reap the benefits in the long term. We believe some of the GCC countries, Oman included, will benefit from growing internationalisation of finance. These are the main reasons for our interest to be present in Oman and look for close contacts with local institutions.
How much does the GCC region contribute to your assets under management?
We do not publish figures by geography, however the GCC is a growing area for Lombard Odier and our strategy is to continue boosting regional presence in the coming years. Lombard Odier’s Dubai office is a hub for our business in the Middle East. Our Dubai office also plays a strategic role as a bridge between our offices in Hong Kong, Singapore, Tokyo and Europe.
Are you looking to target more institutions such as pension funds and sovereign wealth funds in the region?
We are interested to build relationships with relevant local institutions. We have expertise in developing specific solutions for pension funds worldwide and I believe this could be appealing to GCC-based institutions as well. Globally pension funds are generally more interested in fixed-income type investment strategies and GCC pension funds and sovereign wealth funds are now showing a greater interest for such fixed-income approaches.
When it comes to equities and other asset classes these institutions are also interested in risk-based approaches. We are highly specialised in identifying main risks and this approach is appealing to the GCC institutions. We have developed expertise in emerging markets investment which GCC institutions are also increasingly showing interest in.
What is your future outlook on GCC economies?
We strongly believe that GCC economies are well positioned to recover from the current slowdown. Given the low levels of debt-to-GDP ratios, GCC governments can comfortably raise new debt to meet their budget requirements. GCC countries have vast reserves, sovereign wealth funds and enough liquidity keeping their overall financial position better than other oil exporting countries in the world.
Despite the current macroeconomic challenges, we have a positive outlook on the GCC economies. The current situation offers GCC nations an opportunity to reinvent their economies and speed up diversification into other industries. The region’s financial sector remains sound, attractive and well balanced with sophisticated regulations in place. We are reasonably confident that the GCC countries will manage to recover from the current economic slowdown.
© Muscat Daily 2017
