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Interview with Andreas Arni on Zurich’s strong position for private banking, sustainability and more

Interview with Andreas Arni on Zurich’s strong position for private banking, sustainability and more

Interview published in Finews, 14 February 2022

 

Andreas Arni, how different is Lombard Odier in Zurich than in Geneva?

We are an international Swiss private bank. In Zurich, we mainly serve local Swiss-German speakers.

Naturally, we have an affinity to the French-speaking world given we are headquartered in Geneva. But we also have our own identity.

 

What is it exactly?

Our employees have a strong connection to this region. They live here. And the clients are mainly Swiss-German, or live here as well.

 

How many people work in Zurich?

About 140, distributed between our Utoquai and Sihlstrasse offices.

 

How important is the Swiss-German business in comparison to Suisse Romande?

We have been in Zurich for over 30 years, and we are well established. But a large part of our Swiss business is in the western part of the country given our four branches in the French-speaking part and our history.

 

How do you explain this shift towards Zurich?

Lombard Odier often employs experts in Zurich that work for the entire group. This shift towards Zurich is a general trend we see in the banking sector.

 

You joined Lombard Odier in December 2019. What have you achieved since then?

We have steadily increased the level of client assets and business profitability. We also managed to hire staff despite the pandemic, which is a remarkable achievement that speaks to the strength of our brand. Especially given the fact that employees were generally less likely to change banks then. We even rented additional offices.

 

How do you intend to grow in the future?

The intent is to grow organically and not through acquisitions. This can be through our current client relationships or by hiring additional advisors. We are building up selective regions in Latin America, Asia, and the U.K. alongside the Swiss market.

We are also growing in the foundation and family office areas. Between Zurich and Zug, there is a large concentration of family offices. We have already managed to win significant market share and I manage some of those clients personally.

 

You still manage clients?

Yes, at Lombard Odier there are no “pure managers” as one sees in large banks. Our Managing Partners still manage clients.

At Lombard Odier there are no “pure managers” as one sees in large banks. Our Managing Partners still manage clients

How do you differentiate yourself from competitors?

Our market position is a traditional one that adheres to our values. We have been an independent, family-led bank for seven generations now. We focus on long-term security and stability. And an ample capital buffer. Our advisory services are personal, and we are leaders in the field of sustainability.

Sustainability seems to be the theme at all banks right now.

That is true. But our services are based on decades-long expertise and a scientific approach. We have in-house specialists, and we maintain a close partnership with the University of Oxford. It makes us very trustworthy for even the most demanding clients and foundations.

It has allowed us to build up market share as smaller banks do not have this know-how. Our partnership with the Basellandschaftliche Kantonalbank (BLKB), is a good example of that.

 

Will there be other ones like that?

We also have partnerships in Asia, the Middle East and Latin America. You do not have to open your own branches all over the world to get clients anymore. You can work with local partners. Business models are changing, and each partner can focus on their area of competence.

You do not have to open your own branches all over the world to get clients anymore. You can work with local partners. Business models are changing, and each partner can focus on their area of competence

Does Lombard Odier have a minimum asset level for clients?

We are not a retail bank. In that way, there is an entry threshold. But we don’t have a strict minimum. We look at the potential of the client. You can say that, generally, we welcome younger people who have established their own company.

 

In other words, private banks have become more flexible.

Yes, certainly, compared to before.

 

Lombard Odier prioritises sustainability. At the same time, the demand for cryptocurrencies is increasing and they consume a great deal of electricity. How do you justify that?

There are certainly people who are interested. But it is still marginal. Digital assets do not yet play a central role for us as a bank. We also still don’t see the demand for them.

We are certainly open to the technology (blockchain) behind it. But many questions must be answered when it comes to mining cryptocurrencies. Otherwise, many will continue to believe it is not a sustainability-focused technology. In any case, we will continue to pay close attention to new developments.

Beyond that, our work with Taurus, a fintech, will keep us abreast of technological progress in the areas of blockchain and digital assets.

 

In contrast, the business with external asset managers seems very important for Lombard Odier. Why?

The volume of external assets managers (EAM) has risen enormously since the 2008-09 financial crisis. Many employees became independent then. It is a significant market that can’t be ignored. We offer personal services to EAMs just as we do in private banking and include selected investment themes and specific areas of expertise when needed.

 

Will EAMs consolidate or not?

There are two drivers that we are currently seeing. One is succession. Many EAM founders are over 60 and they will stop working sooner or later. Then there is the regulatory side, which is going to exercise enormous pressure on individual companies. That will lead to consolidation at some point.

 

Will you lose clients?

No. I would instead say that it is an opportunity to grow this client base. We never focussed on the small ones but on those that are sizeable and can take advantage of our services. In the future, there will be fewer small EAMs given that many will merge. That is an interesting development for us.

 

What are the largest challenges for Lombard Odier today?

The regulatory environment is certainly one, particularly when it comes to cross-border. The issue of EU market access has not been solved for many of the players. Another challenge is how to successfully invest in the future, particularly in sustainability.

Much depends on how the world looks tomorrow, and what clients ask for. But we are convinced of the opportunity for clients. Last but not least, we must ensure that our new generation of employees are both the ones we want and that they have the right values.

 

What do you mean?

We are competing with companies like Roche and Google. University graduates no longer automatically enter banking as they often did 15 years ago. We are in a war for talent – even for fresh graduates. But there have never been as many opportunities in banking as there are today, particularly in the areas of tech and sustainability.

 

You are part of that previous generation. Why did you enter banking?

When finishing university back then, you first tried to get a job at a bank or in consulting. I worked in consulting and then changed to Credit Suisse after three years.

Nowhere is the relationship with clients as emotional as it is in private banking. You experience everything

What interests you about banking?

It is certainly the personal contact you get. You often deal with the whole history of a family. Nowhere is the relationship with clients as emotional as it is in private banking. You experience everything – I guide my clients through life.

Important information

This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

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