A prudent approach to investing has been part of our DNA from the start:
"The London market has been rocked by massive bankruptcies. […] We now appreciate the benefits of a measured approach. I only wish that I had been even more prudent on everyone’s behalf."
Alexandre Lombard, Diary, 20th September 1847
A Trans-Atlantic Merchant Bank
Discovering the beauty of diversified returns.
From 1790 to 1915, the United States records the most impressive Emerging Market story ever. In 125 years, an agrarian society with only four million people becomes not only an industrial giant with 100 million citizens and the world’s largest GDP but also a pioneer in engineering, telecommunication, steel and oil production and electric power generation.
This tremendous growth is financed by a young and vibrant capital market. Not being hampered by liability laws, joint stock companies and exchanges are established in every state. The New York Stock Exchange goes back to 1792. America represents a highly attractive investment opportunity in the 19th century and allows European investors to diversify their portfolio away from European sovereign debt and stocks in a few canals, railroads and mines. It is not surprising that our Bank jumps on the possibilities that arises in America between its Independence and the First World War.
With the arrival of Charles Odier in 1830, our Bank becomes a classical merchant bank with a Francophile touch. Yet, it is also Charles Odier who encourages Alexandre Lombard’s, one of his partners, interest in the US market and incites him to use that knowledge to advise clients. Whilst running his successful cotton business in Le Havre, Charles Odier has met at the age of 22 the Iselin family, which was to become one of North America’s pre-eminent Merchant Bankers. We know little about the precise relationship between Lombard Odier and Bank “Iselin & Co” in New York except that there is a permanent exchange of staff on partner level. Bank Iselin was also Lombard Odier’s correspondent bank.
Influenced by Alexander de Tocqueville's writings, Alexandre Lombard, who never has the chance to visit the United States, publishes several brilliant books on the financial situation of North America. Another reason for Alexandre Lombard’s affection for America is the spirituality affinity he sees reflected in the US culture. Puritans, Presbyterians and other Protestants share his own work ethic. When he passes away, half of his personal investments are in US stocks.
At the end of the 19th century, Lombard Odier is the largest underwriter of US securities in Switzerland, well ahead of Swiss Bank Corporation in Basel or Credit Suisse in Zurich. As any emerging market, the lightly regulated US market sees its fair share of panics and crashes but Lombard Odier carefully risk-manages its positions and builds the business without suffering losses.
Most importantly, the move pays off generously for the bank’s clients when the value of their investments in German, Austrian, Russian, Turkish and French securities collapses with the First World War. Henry Odier pointedly writes in 1923: “If the Great War did not destroy 50% of all the Genevese portfolios, it can be said that a large portion of this good fortune should be attributed to Alexandre Lombard.”
Our “founding fathers” become one of the largest underwriters of US securities once they discover America as an attractive market and enable their clients to successfully diversify their portfolios. Once again, they are rethinking their business model and build a valuable, research-led and reliable investment bridge between Europe and America.