Vincent Duhamel, Lombard Odier's Asia-Pac CEO, tells WealthBriefingAsia how he intends to double AUM within five years, in a region where pure play private banking is still a relatively new concept.

Vincent Duhamel

It is a truism that high net worth
individuals in the West, where wealth has been around longer, are generally focused on preserving their fortunes, while those in the East are still mainly in wealth creation mode.

So what could a 200 year-old Geneva-based private bank offer
to Asia’s yield-hungry entrepreneurs?

According to Vincent Duhamel, head of the Asia-Pacific and
Japan division of Swiss bank Lombard Odier, a generational change in attitude towards
wealth preservation amongst the region’s wealthiest families, is creating a
unique opportunity for the bank.

“Pure wealth management is a niche that is less well-known
in Asia. Because the wealth tends to be younger, here the model has
traditionally been transactional and brokerage-oriented. But pure play wealth
management is a niche that we strongly believe in, that is where we are at our
best,” said Duhamel.

As Lombard Odier celebrates a quarter century in Asia this year, the
emphasis is shifting from the primary to the second and third generations in
the region. This is where there is a greater need for the bank’s services, said
Duhamel.

“As an entrepreneur you are still a risk-taker. You want
financing from your bank, they give you credit cards, lend you money, provide investment
banking services for when you want to IPO. Many of them have invested heavily
in their own companies, generating 35 per cent CAGR for the last 30 years. We
don’t pretend to be able to compete with those type of returns.”

“But when it comes to the second and third generations, they
tend to be more risk averse, more prudent and better suited to wealth
preservation. Asia is becoming much more open to this approach,” he added.

A turnaround

Duhamel has been in his role for nearly a year now, after
joining from Swiss family office SAIL advisors. During the last year net new
money in the private banking division has increased by over $1 billion to over
$8 billion. “Things have gone faster than I expected,” he said. “We think we
have a competitive advantage on discretionary asset management  and a good opportunity right now. We are specialised and so don't try to
be competitive on lending, IPOs, structured products. So for us it was to
better wait until the right time to define what we had to offer,” he added.

When the bank appointed Duhamel in 2011, he was given three
mandates in Asia.

First, was to develop the commercial side of institutional
business. “Before last March this segment was very limited,” said Duhamel. “But
we have since put in place a lot of commercial opportunities, for example we
have won large mandates from Chinese and Japanese institutions, and it is now
humming along nicely.”

Secondly, Duhamel was tasked with growing its third party
distribution platform, including tying up with other private banks to sell its
funds. It has launched around six of these partnerships in Japan and in March
announced a ground-breaking partnership with 200 year-old Australian private
bank, JB Were.

This tie-up was on the cards since last summer, said
Duhamel. “Australia has a large amount of wealth and is a very sophisticated,
competitive and domestically oriented market. It did not necessarily make sense to go into Australia and put our name on the
door,” he said.

Rather than compete with a 170-year old firm like JBWere, Lombard Odier realised that the aligned culture and mindset would better create a mutually beneficial partnership. Lombard and JBWere private bankers are
financially incentivised to work together and share clients.

War for talent

The third mandate, and possibly the most challenging in Asia, is to grow its private wealth management
business. This part has not grown as quickly as the two others, partly on account
of the battle for talent raging in Asia. Compensation for talented private
bankers has rocketed and the last year bank opted to wait on the side lines
until the dust settles.

Consequently, hires have been mainly on the institutional side. Duhamel has been steadily building his ranks of lieutenants in this business.

Sheau-Yien Wang, previously with State Street Global
Advisors in Singapore, joined as head of key institutional client relationships
in South East Asia. Joanna Wong now heads up Lombard Odier’s third party
distribution in Asia, previously at AllianceBernstein. Former Goldman Sachs
Asset Management executive Hyoung Nam Kim joined as director of business
development for Korea.

One
addition to the private bank was Simon Tan from UBS last December, as senior
relationship manager. Pranay Gupta, a former client of Duhamel’s, joined from ING in January as the
bank’s first Asia chief investment officer. “In Asia, we want to develop the
CIO function within the institutional frame,” said Duhamel, although Gupta officially sits within the private banking arm.

“We stayed careful in the first year,” said Duhamel. “We
hired a few private bankers but we didn’t want to get into the war of talent
that existed, especially last year. It is not the number of people but the quality,
and who fits with the culture of the organisation. So now we started to get a
few interesting people coming on board, with others coming through now.”

Duhamel believes that talented bankers are now approaching
Lombard because of its longer standpoint. “We are attractive to them as we don’t
have the Monday morning meeting to sell this product this week. We take a much
longer view, how we should be managing money, how we should avoid certain risks
and what is the best way for them to prosper long term. This is best for mature
private bankers who have enough scars on their back to realise that this is better
suited to their clients,” he said.

Future growth

So what is the focus for the next 12 months, during
Lombard’s 25^th year in Asia? Hiring for the investment and private
banking teams will take priority, in a bid to meet Duhamel’s aim to double
assets under management to $15 billion in Asia in five years, he said. To put this into perspective, the Geneva-based bank, which traces its roots to 1796, manages more than $160 billion in assets for institutional and high net-worth clients.

The bank currently has 80 people divided between Tokyo,
Singapore and Hong Kong, divided equally between the front office and back
office. Duhamel aims to grow this to 130 within the next five years. 

An ongoing hurdle is going to be building the brand of
Lombard Odier outside of its homeland. “Branding is a challenge, as we are a
Swiss bank that is not so well known here. We don’t want to cheapen the brand
and our main attraction is our capital safety and stability.” The bank is doing
more advertising and sponsorship in the UHNW space, playing to its 'safe and
steady' reputation. Duhamel said Lombard is very conservative, even for a Swiss bank; its partners own a share of the firm and so have a vested interest in its long term performance.

“In 200 years, 45 financial crises, we have never been
bailed out," said Duhamel. "We may not be the right bank for everyone but,
increasingly in Asia, people are seeing the value in our approach.”