The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Top Lombard Odier executives yesterday said they planned to use their Bahamas operation as “a hub” to support further expansion into Latin America, adding that this nation’s financial services industry was likely to join global consolidation trends.

Marc Lopez, Lombard Odier’s group managing director, told Tribune Business that the institution’s Nassau business, and 35-strong staff, will provide the platform to support both its Panama office and the one it plans to open in Montevideo, Uruguay, in 2015.

Mr Lopez, who was in Nassau with Christophe Hentsch, Lombard Odier’s managing partner, to coincide with the 35th anniversary of the bank’s arrival in the Bahamas, said its business in this nation had enjoyed “constant growth”.

He added that Lombard Odier was not focusing on Latin America “just because it’s fashionable”, but rather that it anticipated this region - together with the likes of Asia, the Middle East and other emerging markets - to generate the majority of private wealth management industry growth over the next 10-15 years.

“We want to continue to have Nassau as a hub, as support to the office in Panama and the new office we will open in Montevideo, in Uruguay, in 2015,” Mr Lopez told Tribune Business.

“When we look at our different regions, we look at Nassau as an important hub for all operations in Latin America. We want to use that platform already in place, to leverage that platform in expansion into other areas.

“If we do deliver on these plans, and we see expansion, we will continue to have to staff this office.”

He explained that information technology (IT) specialists based at Lombard Odier’s Nassau office, and other specialists, would “support the various offices we open in the region”.

Its close proximity to Latin and Central America, and presence in the same timezone, make Lombard Odier’s Bahamas unit, based in the Goodman’s Bay Corporate Centre, the natural support base/platform for its regional expansion plans.

Mr Hentsch added: “We have this presence, know how in the Bahamas, and it’s really logical to extend this where we see Latin America growing fast. Let’s develop from this base.”

Lombard Odier is thus in tune with the Bahamas’ focus as a jurisdiction, which has swung to increasingly embrace the Latin American market and its growing high net worth individual client base.

The bank’s Nassau office focuses on private asset management and discretionary portfolio management, along with wealth and estate planning, as its core businesses.

Both Mr Hentsch and Mr Lopez said they also viewed Lombard Odier’s Bahamian office as a “centre of origination for new business”. And the bank is not necessarily casting its net too far afield in search of prospective clients.

Mr Lopez emphasised that Lombard Odier was “very much interested in that local market” of high net worth individuals and their families, both in the Bahamas and the Caribbean, to whom it could provide wealth management and private banking services to.

Regulatory changes, and increasingly onerous tax laws, have already seen many wealthy Europeans leave the continent for kinder fiscal regimes abroad, with the Bahamas among the destinations already seeing some benefits from this outflow.

Mr Lopez said others chose to relocate to the Bahamas, and other nations, for lifestyle and other benefits, adding: “We want to make sure they get to know us.”

Mr Hentsch, meanwhile, told Tribune Business that the Bahamian financial services industry was likely to follow global consolidation trends.

He said this was likely to be driven by a mixture of increased compliance costs, driven by the global regulatory initiatives, together with the need for institutions to achieve economies of scale and the size needed to compete.

“Our business in general, which is international private banking, is more complex than it was,” Mr Hentsch said. “We have had to comply with a lot of new rules put in place over the last few years.

“As a consequence of that, we will see more consolidation in the industry. It might not have taken place yet, but I would not be surprised if the Bahamas sees some consolidation among the players.”

Mr Hentsch said consolidation may not necessarily involve mergers and acquisitions, or the amalgamation, of institutions.

Instead, he said it might involve the ‘outsourcing’ of technology or back office functions, providing these services to other financial institutions. Lombard Odier already does this for five other institutions.

Mr Lopez emphasised that “the quality of the people” in the Bahamian financial services industry will be key to its future growth and development.

He said large and mid-sized financial institutions, with scale and a clearly-defined target market, would be better placed to cope with the impact of global regulatory changes.

“The amount of new regulations in the banking industry is putting a lot of pressure on compliance costs, risk management,” Mr Lopez added.

Lombard Odier, whose roots go back more than two centuries to its 1796 founding, first arrived in the Bahamas as Hentsch Bank.

Mr Hentsch, who represents the seventh generation of the family-owned bank, said Lombard Odier’s status as an independent, privately-owned institution in many respects gave it a competitive advantage, helping to establish its niche.

Unlike a publicly-quoted institution, which has to respond to the short-term needs of its shareholders and the capital markets, Mr Hentsch said Lombard Odier could afford to plan for the long-term while simultaneously focusing on its client needs.

He added that Lombard Odier’s history, which sent a message of stability and continuity, was another potential draw for clients seeking to preserve wealth, as it showed the institution had been able to weather many changes in the financial services industry.

“The best client is the client who came to us because he was advised by another client to join the bank,” Mr Hentsch said.

With the industry becoming ever more complex, Mr Hentsch said scale was growing in importance, as institutions required deep research, compliance and risk management teams to function properly.

“When we arrived here in the beginning, we were here for the long-term,” Mr Hentsch said of the Bahamas. “That’s our profile, that’s our image, that’s our logic.

“We will continue to preserve the model, but adapt it because we are in a fast-changing industry in a fast-changing world.”