Swiss private bank Lombard Odier Darier Hentsch will liquidate its Delta Global and Alternative Strategies funds of hedge funds, but said it will also launch two new funds, Reuters reported following reports in the Swiss media.

The bank has seen clients pull out money and seen the value of assets drop during the credit crunch. It was quoted by the news service as saying that it had enough liquidity to meet present requests for redemptions.

The Swiss private bank, one of the world’s oldest such institutions, did not immediately return emails from WealthBriefing on the matter.

Like other wealth managers, Lombard Odier has seen the value of hedge fund assets hit by the financial crisis, although in recent weeks there are signs that this once-booming investment sector is starting to recover from its poor performance in 2008, when hedge funds, on average, suffered their worst year on record – although funds fared less badly than the broad stock market.

Lombard Odier co-head of hedge funds Cedric Kohler was quoted as saying that liquidation would enable the bank "to create the economic equivalent of side pockets and to restructure our product range by launching new products at the end of June".

A side pocket is used by hedge funds to hold illiquid assets and keep them separate from liquid ones. Such structures are designed to help a fund meet redemption requests and treat its investors fairly.

Lombard Odier expects to distribute 60 percent of the funds' combined SFr1.1 billion ($1.03 billion) in net asset value in 2009 and the remainder in 2010, since some underlying funds will take more time than others to liquidate, Reuters said.

Two new products have been prepared for launch at the end of the month; a multi-strategy fund called LO Dynamic Alternative Strategies, and LO Alternative Beta which aims to replicate a broad hedge fund index, the news agency said.