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
Building the safety-net for our citizens
No war has reshaped the world as fundamentally as the Second World War did. With Europe and Asia in ashes, America goes its own way and embarks on the “American Dream”. The United States become the world’s wealthiest nation. Large, affluent suburbs spring up; the interstate highway system is built; everybody can afford a car; children are sent to college; a wealthy, white middle class emerges.
Whilst America prospers, Russia and China disappear behind the Iron Curtain. With American aid, Europe and Japan are rebuilt. The currency reforms in 1948/49 are the starting point. Within ten years, the economic miracle or “Wirtschaftswunder” allows Japan and Germany to catch up. By 1957, the European Union is created. A year later, capital and currency controls are lifted.
America’s positive trade balance allows US citizens to both consume and save. Large amounts of money pour into pension plans, life insurance policies and mutual funds. These savings underpin the thriving US capital market, which also benefits from the reforms of the Great Depression. With the Bretton Woods conference in 1944, a new post-war financial order is established and substitutes the US Dollar for gold. America’s currency becomes the world currency. American capital dominates the investment world.
During the early post-war years, the US Dollar and Swiss Franc are the only two freely convertible currencies in the world. Our bank resumes its old strategy of selling North American securities. Consequently, in 1950, Lombard Odier sets up an office in Montreal. When European stocks become attractive investments again after 1958, the bank brings American equity research methods to Europe and introduces institutional US investors to these opportunities. Eventually, Lombard Odier creates Trans-Atlantic Securities, opens an office in London in 1973 and is the first foreign bank to acquire a seat at the New York Stock Exchange in 1979. Lombard Odier enters the world of institutional asset management.
Asset management opportunities also arise in Switzerland, when a ballot decides in 1971 to strengthen the existing old-age insurance system by complementing it with mandatory pension plans. With already considerable expertise in this domain from its own pension plan, established in 1926, Lombard Odier helps to draft and implement the new pension system.
In parallel, the partners expand the operations in London. Lombard Odier starts to issue thematic funds and introduces Asian investment opportunities to Europe. By 1996, Lombard Odier employs 100 staff in England and manages over CHF 10 billion in assets. Quite naturally, our bank has become a reliable and professional player in institutional asset management, spanning both sides of the Atlantic. A new business model is born and complements today the private wealth management as second most important business division.