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Our Managing Partner, Frédéric Rochat, voices his faith in the Swiss financial model
Article published in Il Sole 24 Ore, 26 April 2023.
“We shouldn’t confuse the crisis in a single institution with the situation in a country’s entire financial sector.” Frédéric Rochat’s words betray no bitterness, nor the desire to exploit the difficulties his competitor is going through, but rather a need to reaffirm that the Swiss wealth management industry “remains just as solid as during past centuries, and in fact has continued to get stronger.” This point of view is all the more relevant because it comes from one of the managing partners of Lombard Odier, the Geneva-based global independent wealth and asset manager, which has 225 years of history behind it, and which manages total client assets of CHF 300 billion.
Some people believe it was the Credit Suisse name itself that generated confusion among investors, encouraging them to link the institution’s difficulties to the entire sector. Rochat says that would be a fundamental mistake. “The problems,” he explained to Il Sole 24 Ore, “emerged because the group had in a certain sense become less ‘Swiss’: it had grown at an international level, moved into activities other than wealth management, and above all paid less attention to some of the basic elements in the successful Swiss model, such as prudence, stability, solidity and long-term vision.”
So, in Rochat’s opinion, the loss of client confidence and the outflow of deposits do not reflect “the worries everyone has about the country’s financial sector.” Lombard Odier has little to fear from the situation, and not only because it has no direct involvement in commercial banking. “Our model,” says Rochat, “is in fact very different from that of some other large competitors that are quoted on the stock exchange: we are private and independent, and not under any pressure to achieve quarterly results, and so we can concentrate on reasonable long-term objectives, which are the same as those of our clients, with no conflicts of interest.”
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Sharing the very same outlook as the people whose wealth they are managing, specifically entrepreneurs and wealthy families, is one of Lombard Odier’s key strengths – this is especially true at a time when clients are tending to re-evaluate their banking relationships. “Today, people who are worried about solidity are not looking at Core Tier 1 ratios or liquidity parameters, but rather at the business model behind them,” Rochat points out. He stresses that, “Exclusive focus on asset management, without any other financial activities, means having a very clean, liquid and stable balance sheet, which therefore represents the greatest guarantee of solidity.”
The Credit Suisse affair and the difficulties experienced by other banks in the United States have increased investor awareness, especially among the high-end clients with whom Lombard Odier is in contact. “These people,” adds Rochat, “choose banks that are best aligned with their long-term objectives and that are able to provide security in the current phase of high volatility and uncertainty.”
Read also: Alberica Brivio Sforza: flexibility and sustainability are Lombard Odier’s trump cards
At the same time, entrepreneurs and high-net-worth investors tend to have “clear convictions”, which nonetheless need to be adapted to the current macroeconomic scenario. “The probable recession and the short-term volatility require prudence in the equity market, while bonds, which until just a few months ago were scarcely given room in portfolios, have never looked as attractive,” observes Rochat, without losing sight of the two fundamental long-term themes: investing sustainably and diversifying into private assets. “Over 60% of the sales of US companies are generated by unlisted firms,” adds Rochat, who considers Italy to be a strategic market because of the density of its entrepreneurial ecosystem. “We’re impressed by the significant success stories of many of our Italian clients and so are continuing to invest in business development in your country,” he concludes.
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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