The partnership with Lombard Odier, a Swiss bank, will enable publicly listed Mandiri to improve its wealth management unit as its seeks to entice Indonesians to repatriate assets stored overseas.

The deal will see Lombard Odier, which will celebrate its 222nd anniversary in June, cooperate with Bank Mandiri to manage the latter’s 51,000 priority customers, who each have accounts over Rp 1 billion (US$71,850).

As many as 1,700 customers were categorized by Bank Mandiri as private clients, with each having accounts of over Rp 20 billion, said the lender’s small business and network director Hery Gunardi.

The deal would help Mandiri increase the fee-based income contribution of its wealth management unit to Rp 450 billion this year, up from Rp 370 billion recorded in 2017, Hery said.

“We want to make our wealth management unit an engine for growth,” Hery said recently. “Lombard [Odier] will help us gain access to sophisticated investment products for our high profile customers.”

Mandiri’s wealth management unit only contributes 33 percent of the Rp 192 trillion in assets under Mandiri Prioritas and Mandiri Private, both brands designed to serve premium customers.

Mandiri aimed to increase this contribution to 40 percent this year and to 50 percent in the next three years, Hery said.

With the help of Lombard Odier, Mandiri will develop a so-called “holistic approach” for managing their customers’ assets involving long-term fund management suitable for families instead of short-term, individual investments.

“We have been applying a holistic approach for our clients back in Europe,” Lombard Odier Asia Pacific CEO Vincent Magnanet said. “We want to understand entirely what their needs and constraints are as a family so we can assist them in their business governance.”

With 30 years of experience in Asia, Indonesia is the fourth country in Southeast Asia Lombard Odier has expanded to after Singapore, Thailand and the Philippines.

Magnanet said he believed that the top 20 private banks in Asia managed less than 20 percent of high-net worth financial assets, with the remainder sitting with local lenders.

“Now, however, with the changes in regulations, there is a chance [for the customers] to get better products and services [...] as we want to protect, grow and transmit these assets,” Magnanet added.

The Finance Ministry revealed in early 2016 that at least 84 Indonesian citizens held bank accounts in Switzerland with total assets amounting to Rp 2.54 quadrillion, exceeding the 2016 state budget of Rp 2.09 quadrillion.

Hery said many of Bank Mandiri’s wealthiest customers, despite their large accounts, continued to choose regular deposits, which offered rather small yields.

Other wealthy customers who were more knowledgeable about fund management preferred to invest overseas as they could find more diversified portfolios based on various risk profiles, he said.

Mandiri Manajemen Investasi (MMI), which oversees Bank Mandiri’s wealth management unit, will offer three different categories of Lombard Odier products based on customer risk profiles and funding schemes.

“The portfolio contracts will be made bilateral and will directly connect the investor and the customers themselves,” said MMI president director Alvin Pattisahusiwa recently.

The product categories were capital preservation, which offered low-volatility assets; capital accumulation, which balanced wealth diversification, and capital growth for customers with high risk profiles, Alvin added.

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