Lombard Odier wants to lure Chinese investors to put money into offshore funds. The high hopes it harbored for this business have received a significant setback.
Lombard Odier's plans to tap into the promising Chinese market have been stopped, at least temporarily: The private bank from Geneva in November launched a fund designed to attract very rich Chinese clients to invest their money abroad.
The People's Bank of China, the country's central bank, told Lombard Odier to refrain from launching similar products, the «South China Morning Post» reported today. Vincent Duhamel, the head of the bank in Asia, confirmed the information to the newspaper.
Orderly Chaos
With the order, the central bank reacted to a run of asset managers in the region, who wanted to exploit new possibilities of the so-called Renminbi Qualified Domestic Institutional Investment (RQDII), Duhamel said. The program allows Chinese citizen for the first time to invest their renminbi-denominated assets abroad.
The central bank in December stopped the program again as it aimed to bring order into the flood of money. Lombard Odier was forced to retain a further fund intended for rich Chinese for the time being.
Chinese Fatca
That may not be the end of the story though: China wants to know exactly how much money its citizens invest abroad, Lombard Odier says. As it bids to achieve this aim, the country will likely install some sort of 'Chinese Fatca'.
«Any organization has to work with the assumption that this is going to be the case,» Duhamel told the newspaper.
Lombard Odier is developing its private banking in China with local partner Industrial Bank.
