The Geneva-headquartered bank said in a statement that it will support Bank Mandiri, the largest bank in Indonesia by assets, in developing its private banking arm through investment and family services.
The trigger for the agreement may have been the tax amnesty programme, which ran from mid-2016 to early 2017. Many of the country’s high net worth individuals and families have since transferred their offshore wealth back to Indonesia.
The programme not only lowered the fiscal deficit and drive tax revenue for the country, but also encouraged the repatriation of offshore assets, creating wealth management opportunities.
This month, Bank Mandiri is planning to launch onshore discretionary management services. The partnership with Lombard Odier will give private clients access to the firm’s wealth management and investment products.
Business model
The agreements the Swiss firm has in the region follow a specific model. The local banks pay a percentage fee based on the aggregate assets under management, on top of the management fee charged for the investment products.
However, in Indonesia the firm is not a co-fund manager and therefore the agreement with Bank Mandiri will be slightly different, according to a spokeswoman for the firm. Lombard Odier will receive only management fees, not fees based on assets managed, she said.
Prior to this partnership, the Swiss bank made a similar move in December 2014 by partnering with Kasikornbank in Thailand, which saw the highest high net worth individual growth in Asean.
Lombard Odier manages global investment funds on behalf of Kasikornbank’s private clients in return for the aforementioned fees. It also serves as an exclusive offshore custodian for its Thai partner.
The firm also inked an agreement with Manila-based UnionBank in August 2016 to launch two wealth management products to clients in the Philippines.
Strategic projects
Lombard Odier noted that the agreements made in recent years across south-east Asia constitute a series of strategic projects seeking onshore partnerships. It was initiated in 2012 with the aim to expand the firm’s network and client base in the Asia Pacific region.
Commenting on the latest agreement, Vincent Magnenat, chief executive of Asia Pacific at Lombard Odier, said that the opportunities he sees in Indonesia lie in the wealth management market, as clients want to be served locally, with consideration for different risk profiles.
The partnership could also further boost the leading position of Bank Mandiri in Indonesia’s private banking industry, Kartika Wirjoatmodjo, the banks’ chief executive officer said. He added that the partnership is a combination of Lombard Odier’s global investment and wealth management expertise with Bank Mandiri’s local knowledge and network.
As of the end of December 2017, Lombard Odier managed total client assets of $281bn (£196bn, €227bn) globally.
