Lombard Odier Darier Hentsch & Cie., Geneva’s oldest private bank, aims to double the wealth it manages in Japan to 200 billion yen ($2.5 billion) in five years through tie-ups with local lenders led by Chiba Bank Ltd. (8331)
The Swiss firm, which has alliances with four regional lenders including Shizuoka Bank Ltd. (8355) and Yamaguchi Financial Group Inc. (8418), plans to clinch accords with another five banks to boost access to more wealthy families and business owners, Norbert Joue, president of Lombard Odier’s Tokyo office, said in an interview.
Lombard Odier’s efforts come after Barclays Plc (BARC) last year allied with Sumitomo Mitsui Financial Group Inc. (8316), Japan’s No. 2 bank by market value, to tap assets of rich Japanese seeking to diversify their retirement portfolios. Japan has the world’s second-highest population of millionaires, trailing only the U.S., according to Capgemini SA and Bank of America Corp.
“We have a similar philosophy as Japanese regional lenders, given that we have both focused on locals in our long history,” said Joue, a 45-year-old French native who is fluent in Japanese after residing in the country for almost two decades. “Business owners in their early 60s are our vital clients.”
The Geneva-based bank aims to provide returns of about 4 percent on average to clients after deducting fees, and sets the minimum principal invested at 100 million yen, said Katsutoshi Iso, executive director of the Tokyo office. Lombard Odier targets generating a cumulative return of as much as 20 percent over five years, Iso said.
To fend off competition from Japanese megabanks led by Mitsubishi UFJ Financial Group Inc., Chiba Bank wants to attract wealthy clients in its local market with Lombard Odier’s services, said spokesman Jun Ogasawara. Japan’s fourth-biggest regional bank by assets deployed about 100 money advisers by the end of May to its 106 branch offices for part of its wealth management business, he said.
Chiba Bank rose 1 percent to 520 yen at 10:06 a.m. on the Tokyo Stock Exchange. The lender, based in the prefecture east of Tokyo, has declined 1.5 percent this year, less than the Topix Banks Index (TPNBNK)’s 6.8 percent drop.
The number of people in Japan with more than $1 million of investable assets rose 5.4 percent last year, according to the report by Capgemini and Bank of America’s Merrill Lynch Global Wealth Management unit. About 80 percent of the nation’s high- net worth individuals are over the age of 55, it said.
Wealthy Japanese “remained the most conservative in the world and held 55 percent of their aggregate portfolio in fixed income and cash/deposit vehicles,” the firms said in the World Wealth Report last month. That’s up from 48 percent a year earlier and compares to the global average of 43 percent.
Sumitomo Mitsui, Japan’s second-biggest lender by market value, said in December that it’s targeting about 600 billion yen in wealth-management assets through its tie-up with Barclays, betting savers will diversify out of concern that an aging population will strain the pension system.
The wealth-management market in Japan for people holding more than 100 million yen of investable assets has recovered to more than 200 trillion yen after a slump following the global financial crisis, Hiroyuki Miyamoto, a senior consultant at Nomura Research Institute Ltd. in Tokyo, said July 1. The market was as large as 250 trillion yen in 2007, Miyamoto said.
Growing concerns over Japan’s financial status and future economic growth, coupled with the March 11 earthquake and tsunami, increased inquiries from local customers for the bank’s asset management services, Iso said without elaborating.
Japan’s population is aging as people born in the five years after the end of World War II, the so-called first- generation baby boomers, reach retirement age. About 23 percent of Japanese were over 64 last year, up from 20 percent in 2005, according to the national census released on June 29.
Lombard Odier, founded in 1796 after the French Revolution, has 1,900 employees worldwide in more than 20 locations and manages 150 billion Swiss francs ($178 billion) of assets, according to its brochure. In Tokyo, the bank has 20 people including Joue and Iso, the French banker said.
“Smaller business owners, who have built their wealth in Japan, have a more global mindset for protection of their assets,” Iso said. “They aren’t going to be hung up on the Japanese yen or Japanese bonds.”
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