Nowhere is the relationship with clients as emotional as it is in private banking, Andreas Arni says in an interview with finews.com. «You experience everything,» Lombard Odier's head of the bank’s Swiss Domestic market adds.
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 either Swiss-German - or they live here as well.
How many people work in Zurich?
About 140, distributed between the Utoquai and Sihlstrasse offices.
How important is the Swiss-German business in comparison to the one in the 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.
«Lombard Odier now often employs experts in Zurich that work for the entire group»
But when we look at where we are investing, in the number of advisors for example - then the reality is that a great part of that is going into the German-speaking region.
How do you explain this shift towards Zurich?
The potential in Zurich is often much larger than it is in Lausanne, Vevey, Fribourg or Geneva. Part of that is because the talent pool is about four times as large given the high number of banks and insurances. 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.
In what way?
The main Swiss banks have concentrated their international business in Zurich in recent years. As an example, they used to work the German business out of Basel. The same goes for mid- and back-office jobs.
«We are building up selective regions in Latin America, Asia, and the U.K. besides the Swiss market»
With all that, the number of personnel located in Zurich has grown constantly. If you are looking for a compliance expert for a certain country, for example, you can often find them in Zurich.
You joined Lombard Odier in December 2019. What have you managed to achieve since then?
We steadily increased the level of client assets and business profitability. We also managed to hire staff despite the pandemic, which is something remarkable and an achievement that speaks to the strength of our brand. Not least given that employees were generally less likely to change banks then. In the meantime, 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. besides the Swiss market.
«At Lombard Odier there are no ‹pure managers› such as the large banks have»
We are also growing in the foundations and family office areas. Between Zurich and Zug, there is a very large concentration of family offices. We have already managed to win significant market share and I manage some of those clients.
You still manage clients?
Yes, at Lombard Odier there are no «pure managers» such as the large banks have. Even our managing partner Patrick Odier still manages clients. All the other partners do as well.
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 lead in sustainability.
Sustainability seems to be the theme at all banks right now.
That is true. But our services are based on years-long expertise and a scientific approach. We have in-house specialists, and we maintain a deep partnership with the University of Oxford. It makes us very credible for even the most demanding clients and foundations.
«The agreement serves as a pilot scheme for us, and they are an important partner»
It has allowed us to build up market share as smaller banks do not have this know-how. Our partners, the Basellandschaftliche Kantonalbank (BLKB), are a good example of that.
What is the partnership about?
BLKB started offering investment funds this year that are managed by us. We are also looking at offering other services such as discretionary solutions so that a client can come in and say in the future that I would like to have a Lombard Odier mandate.
Will there be other ones like that?
Some other cantonal banks have said they were interested after we announced our partnership with BLKB. It is not an exclusive agreement, but we are going to focus on them first. The agreement serves as a pilot scheme for us, and they are an important partner.
«Business models are changing, and each partner can focus on their area of competence»
We also have partnerships in Asia, the Middle East and Latin America. You do not have to open your own branches everywhere to get clients anymore. You can work together. 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 earlier.
Lombard Odier prioritizes 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.
«It is a significant market that can’t be ignored»
We are certainly open about 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 bank 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 includes 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 get larger – and stronger – EAM clients. We never focused on the small ones but on those that had the necessary mass and who could 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 in cross-border business. 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.
«We are in a war for talent – even for fresh graduates»
Much depends on how the world looks tomorrow, and what clients ask for. But we are convinced about the opportunity for clients. Last but least, we also 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.
What interests you about banking?
It is certainly the personal contact you get. You are often dealing with the whole life 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.
Andreas Arni is the head of Lombard Odier's Zurich office since December 2019. He is also responsible of the bank’s Swiss Domestic market. He graduated from the University of St. Gallen with a Ph.D. in business studies and was most recently Head of Entrepreneurs & Executives Switzerland at Credit Suisse, where he also was a Member of the Private Banking Management Committee Switzerland. Previously he assumed a similar position at UBS. He brings with him over two decades of experience in the wealth management industry.
