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Lombard Odier breaks with tradition to publish results for first time

ZURICH (Reuters) – Lombard Odier on Thursday became the second Swiss private bank this week to break with more than two centuries of tradition and publish results for the first time.

The figures showed the famously discrete Geneva bank to be more strongly capitalised than its cross-town rival Pictet & Cie, but less than half as big in terms of its 156 billion Swiss francs ($170.6 billion) in assets under management.

This confirms Lombard Odier, still run in part by descendents of its founding family, as the fifth largest private bank in Switzerland by assets, after UBS and Credit Suisse, Pictet, and Julius Baer.

Lombard Odier and Pictet are not making the disclosure by choice. Both cases are the result of these partially family-controlled banks becoming limited partnerships, abandoning a structure where partners assumed unlimited personal liability in the event of a crisis.

A tax probe by U.S. prosecutors has also dragged both banks into the spotlight: Lombard Odier came forward in December under a scheme brokered by the Swiss and U.S. governments for Swiss banks which have helped wealthy Americans evade taxes.

Meanwhile, Pictet is among roughly a dozen Swiss firms which are under criminal investigation for allegedly helping wealthy Americans evade taxes.

Patrick Odier, one of Lombard Odier’s eight managing partners, said the bank had set aside a provision for the U.S. investigation, but did not disclose details.

The bank held 23.8 percent in core capital, which is almost twice as much as the level required by the Swiss financial regulator.

This reinforces a perception of Geneva’s private banks as solidly capitalised and risk-averse.

“Our strong capitalisation is one of the foundations of our clients trust and we want to make sure that this objective of being one of the best capitalised banks in the world is continued in the future,” Odier said.


But both Lombard Odier and Pictet are increasingly moving beyond their roots of managing the wealthy’s finances.

Lombard Odier has expanded asset management activities to complement its core business of private banking with hires such as BlackRock Inc.’s Nancy Everett, a U.S. fund expert, and Ruud Hendriks, a former European sales chief for Goldman Sachs’ asset management arm.

Lombard Odier’s asset management business manages 47.8 billion francs, compared with the 114.7 billion it looks after for wealthy clients. A third division which offers technology to other banks manages 48.5 billion francs.

Lombard Odier said it posted “slight” outflows for the first six months, because withdrawals from low-yielding money-market funds in asset management outstripped the fresh funds that the wealthy client arm had attracted.

It is not required to publish its net fresh funds, but said it would do so for the full year.

The bank’s net profit in the first six months of the year was 62.5 million Swiss francs (68.31 million US dollar). The bank did not provide year-ago comparison figures and is not required to.

Lombard Odier’s expansion of its private banking business has meant taking on higher credit risk as clients, particularly in expanding markets such as Asia, seek loans and credit.

But Lombard Odier partner Frederic Rochat said the bank’s credit book was limited and fully backed by securities held by clients.

Mirabaud, a smaller Geneva rival which converted to a limited partnership from January, also reported results on Thursday, unveiling a profit of 17.5 million francs.

In its half-year results on Tuesday, Pictet posted net profit of 202.9 million francs. The bank held 319 billion francs in assets under management, while it had 21.7 percent in core capital.

(Reporting by Katharina Bart and Joshua Franklin.; Editing by Mark Potter, Pravin Char and Jane Merriman)

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