Rich Chinese hold the key to Asian growth for Swiss bank

Assets held offshore by wealthy Chinese could more than double the funds under management in Hong Kong and Singapore by Lombard Odier, said Vincent Duhamel, head of Asia at the Swiss private bank.

One of the largest independent Swiss private banks, Lombard Odier will target wealthy Chinese clients who are handing their wealth over to the second generation, as it bids to grow its discretionary portfolio management business.

"They [the second generation of well-off Chinese] are well-educated and good at a number of things, but not very good at the one thing their fathers or mothers were," Duhamel said. "They tend to be more open to DPM and more comfortable about delegating and hiring people for the management of their asset portfolios."

Unlike advisory services in which trading decisions are made by customers themselves, DPM allows private bankers to make judgments on trading.

Asian investors, many of whom are business executives, are generally known to prefer to invest or trade on their own, unlike the majority of investors in Europe. On average, DPM business accounted for about 5 per cent of an Asian private bank's assets under management last year, compared with 25 per cent in Europe, according to a report by Boston Consulting Group.

But in the case of Lombard Odier, about half of the private client assets were managed under discretionary mandates, said Duhamel, making it a leader in the business that all its rivals are keen to grow. The bank has assets of US$210 billion under management and the contribution from Asia, distributed across its offices in Hong Kong, Singapore and Japan, currently amounts to US$8 billion.