Rothschild shaken by a third key departure

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NM Rothschild, one of the last remaining bastions of independent British merchant banking, was rocked yesterday by the departure of John Bishop, one of its top executives. His is the third senior departure in a matter of weeks, and insiders indicated that several more heavy-hitters are about to leave.

The exodus points up dissatisfaction within the bank over the personal style of leadership of Sir Evelyn de Rothschild, the chairman, and a perceived lack of strategy in the rapidly changing world of City investment banking. Insiders reported angry exchanges as Sir Evelyn sought to stem the outflow.

Mr Bishop was managing director of Rothschilds and its most senior executive responsible for trading activities. He is also chairman of the company responsible for the London Gold Fixing and advises the Bank of England on bullion matters.

Mr Bishop is to join Union Bank of Switzerland as senior vice president, where he will run the global precious metals and commodity risk management activities. UBS is one of the world's leading bullion houses.

The hiring marks another step in UBS' aggressive strategy of building up its activities in London, which is becoming the focus of the Swiss bank's global investment banking operations.

In late April UBS announced the hiring of Michael Phair, who was in charge of Rothschild's privatisation work in Eastern Europe and other emerging markets. His departure was a serious blow to Rothschild, which has enjoyed a strong reputation as an adviser to governments on the sale of state- owned assets.

Shortly afterwards Rothschild suffered its second serious defection, with the departure to BZW of Anthony Fry, one of its high-flying corporate financiers. Mr Fry, aged 40, had been senior director on a number of important accounts, including British Airways, Pearson and the Telegraph newspaper group. Mr Fry, who had joined Rothschilds straight from Oxford, was regarded as one of the leading members of the successor generation within the bank. But he had also been given responsibility for Rothschild's press relations, a thankless task in the present circumstances, and is understood to have grown disillusioned.

The spate of defections exposes growing frustration among senior executives at Rothschild, where insiders describe an increasingly strained working atmosphere.

The acquisition last year by Merrill Lynch of the leading City stockbroker, Smith New Court, in which Rothschild had a 26 per cent stake, left the London merchant bank's strategy seemingly in disarray. The end of the special relationship deprived Rothschild of an important partner, and cast doubt on its ambition to remain independent at a time when other medium-sized British investment banks were falling to rich predators.

NatWest Group, which was looking to bolster its own corporate finance business, held talks late last year with Rothschild about a joint venture, but they were eventually blocked by Sir Evelyn. In November Rothschild took the unusual step of issuing a statement that the family intended to remain in control of the bank.