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
French Investment Bank
While the Peace Treaty of Vienna in 1815 redraws the boundaries of Europe, Geneva recovers slowly from its "French period". Politically, the City joins the Swiss Confederation and has its neutrality recognised. Economically, the 20 years following Napoleon’s wars witness few business opportunities. The cotton & silk industries face severe competition from England and slowly fade away. The watch making industry however does better. Successfully combining watches and jewelry, it reconquers the export markets lost during Napoleonic times.
The restoration of the Bourbon King Louis XVIII restores peace in France. Importantly, many of Napoleon’s far reaching reforms (Departmental structure, tax system, Écoles Superieures, Banque de France & Code Civil) are maintained and ensure political stability. With the helping hand of the king, the economy takes off.
The Hentsch and Odier families which established footholds in Paris during the Empire start financing the first canals and railway lines linking coal fields and iron mines in the north to the traditional industrial centres in Paris and Lyon . Both, the Hentsch and the Odiers are part of a new generation of Merchant Bankers, who form the "Haute Banque" in Paris. The families not only assume leading positions in French society, they are also directors at the Banque de France and amongst the financial pioneers of their time. They create with the Credit Mobilier banks a new type of universalbank with the specific purpose of financing industrial developments. Members of the Hentsch family are co-founders of BNP Parisbas, Banque Indosuez, Société Générale and several savings banks (Caisse d’Epargne).
While the French family branch of the Odier and Hentsch prosper in Paris, the association of Jean Eloi Lombard with Charles Odier in 1830 also transforms the traditional business model of our bank in Geneva. Charles Odier brings not only a contribution of 80'000 Livres but also his priceless French connections and his merchant banking expertise. This allows Lombard Odier to actively participate in financing the industrial development of France and the Romandie.
In a few years, Lombard Odier is established as a most enterprising merchant bank with a reputation which goes well beyond Switzerland. In the 1850/60s, our bank helps to create the Genevan stock exchange, the insurance company La Genevoise and the establishment of other financial institutions. Due to its expertise, it becomes a leading member of a Genevan syndicate distributing foreign shares and bonds. By the end of the 19th century, it will be the lead underwriter of American securities in Switzerland.
Yet at all times, Lombard Odier et Cie. remains conservative, well capitalised and with strong risk controls. Whilst in 1857 and in 1889, the Paris branches of the Odier and Hentsch families suffer severe losses and see their fortunes reversed, our bank remains solid and solvent due to the healthy system of checks and balances between the partners.
Once more, our founding fathers are able to adapt to a new economic environment and rethink their business model. The result is a dynamic Geneva merchant bank which contributes substantially to the development of our civil society. That it is done without assuming undue risk is even more remarkable.