The venture, announced on Friday, will see ABN Amro Bank, which owns UK stockbroker Hoare Govett, and NM Rothschild, merge their global equity capital markets business.
ABN Amro's Wilco Jiskoot, who will sit on the executive committee overseeing the new business, denied that the venture was a stepping stone to a full merger. "It's purely a strategic move," he said. But Matthew Czepliewicz, European banking analyst at Salomon Brothers, commented: "The combination will allow Rothschild to bow out gracefully from its independence, without any loss of face."
Rothschild was unlikely to be in a position to inject any capital into the business, he said. The only option then would be for ABN Amro to buy out the firm, a leading presence on the European financial stage since the turn of the last century.
Rothschild is best known for its corporate finance advice, where it has become a leader in advising governments on privatisations. But it has trailed its competitors in other areas, notably in underwriting and distributing international equity offerings.
Under Sir Evelyn de Rothschild, the group has lost out to the more powerful integrated firms. "It's been directionless for years," said one analyst.
The problem was exacerbated last year when Merrill Lynch, the US securities house, bought out broker Smith New Court, with which Rothschild held a special relationship. The deal was seen as a snub for Sir Evelyn, whose one conduit for distributing shares was snatched from under him.
Rothschild officials on Friday admitted the sale of SNC had prompted a re-evaluation of how the group could capitalise on its strong corporate finance franchise. But the combined venture will function as a partnership, and there will be no capital invested in it, at least for now.
How revenues from the business - which will operate only outside the UK - will be shared was not disclosed, although the indications are that they will be split on a 50:50 basis.
Mr Jiskoot said he expected the venture to have a positive impact on ABN Amro's earnings within the next couple of years: "We can make a giant leap ahead without investments."