Rothschild, one of the world's largest private banking dynasties, announced plans yesterday to merge its London and Paris operations under the leadership of Baron David de Rothschild, currently head of the French part of the bank.
The head of the English branch of the family, Sir Evelyn de Rothschild, who will be 72 next month, will retire from day-to-day management after 21 years running the UK bank, NM Rothschild.
The move, which has been expected for the past few months, is an attempt by the Rothschild family to make the complex holding structure of the bank's various arms more transparent. Under the terms of the arrangement, the English and French families will realign their holdings so that both have equal stakes in the business under a single, new holding company called Concordia. At the moment the UK Rothschild clan controls more of the bank in every territory apart from France.
To rebalance the two sides the French family has agreed to pay a substantial sum to members of the English side. The figure has not been disclosed but it is thought to be in the region of £400m.
In return the English side of the family will reduce its stake in the Swiss holding company, which currently sits below Concordia, from 73 per cent to 52.3 per cent.
Sir Evelyn will remain chairman of NM Rothschild, but stands down from the board of its parent company, Rothschild Continuation. Baron de Rothschild will chair Continuation and take management responsibility for the London bank.
Baron de Rothschild, 60, is already senior partner of the French bank. "We firmly believe that these measures to consolidate the various Rothschild shareholder and business interests will create a stronger, more unified group," Baron de Rothschild said.
Under Baron de Rothschild's stewardship, Rothschild in France has risen to the top ranks of the merger and acquisition league tables and can boast similar positions in other parts of Europe. However, the bank, which only employs 2,100 around the world, is dwarfed by its bulge bracket competitors such as Citigroup and Goldman Sachs in America.
Baron de Rothschild's rise reflects the growing importance of investment banking for the company, which was originally founded by Mayer Amschel in the 1770s. He had not been the first choice as successor to Sir Evelyn.
The baron's English cousin, Amschel Rothschild, had been groomed to take over as head of the English arm of the banking dynasty, but he committed suicide in 1996.
Historically Rothschild has benefited and suffered from political events. The English part of the bank made its name bank-rolling the country's campaign against Napoleon in the 1790s.
More recently, the bank was boosted by the close friendship of Margaret Thatcher and Sir Michael Richardson, the head of corporate finance who died recently.
Sir Michael's presence in the 1980s coincided with large swathes of advisory work on the privatisations of the decade.
In France, Rothschild was one of 39 French banks that were nationalized by Socialist President Francois Mitterrand in 1981.
In 1983, David convinced the French government to give the Rothschilds a new banking licence.Reuse content