Skip to comments.The future of Rothschild - Evelyn's dauphin
Posted on 02/14/2003 7:44:47 PM PST by Phil V.
From The Economist print edition
As Lazard prepares for a sale, can Rothschild remain independent?
Sir Evelyn's old-fashioned image
BEFORE he joined Lazard, Bruce Wasserstein talked to Rothschild, another family-owned bank, about buying a stake and running its investment-banking business. But the family did not warm to the forceful American. Lazard's gain and Rothschild's loss? Perhaps.
Sir Evelyn de Rothschild, chairman of N.M. Rothschild & Sons, the London end of the family firm, and a former chairman of The Economist, did not want to let an American merger specialist run, and possibly sell, his bank. Although it is reported that he will soon name his cousin David de Rothschild, chairman of Rothschild & Cie Banque, the family's French bank, as his successor, Sir Evelyn says only that “we are having a rearrangement” and that David will take on a bigger role. When David spends more time in London, Edouard de Rothschild, his younger half-brother, will take over more of the business in Paris. Sir Evelyn insists that he is not retiring.
Sir Evelyn has fought for decades to keep his bank independent. In 1980 he even fell out (for a time) with his cousin Jacob, now Lord Rothschild, who favoured a merger with S.G. Warburg, another British merchant bank. So he is unlikely to regret turning Mr Wasserstein down. Since becoming Lazard's chief executive in November 2001, Mr Wasserstein has been dressing up the bank for an expected sale to a bigger house: he has been quelling infighting, stopping defections (and sometimes failing), poaching talent and building up Lazard's capital-markets business.
Rothschild should avoid a similar upheaval. Sir Evelyn sees no imminent change in the ownership of the family's assets (which include a stake in The Economist). At the centre is Rothschilds Continuation Holdings (RCH), registered in Switzerland, which controls N.M. Rothschild. RCH is controlled in turn by Rothschild Concordia, another Swiss company, of which the British branch of the family, headed by Sir Evelyn, owns three-quarters and their French cousins the rest. David de Rothschild will probably follow Sir Evelyn as chairman of RCH. He, Edouard and Eric—another cousin, who runs Château Lafite, the family wine business—could try to buy most of Sir Evelyn's stake in Rothschild Concordia. Sir Evelyn says he does not intend to sell any shares. Yet control of N.M. Rothschild would make it easier for David eventually to assert authority.
David de Rothschild's priority will be to build better links between the banks in London, Paris and New York. That is something he had already begun as global head of the merger-advisory business in 1998, when he set up an investment-banking committee consisting of himself, Edouard and leading Rothschild bankers in London. Ultimately he might merge the French and British banks.
The bank is doing well. According to Dealogic, a capital-markets information firm, Rothschild ranked tenth in the global merger-advisory league last year; helped by a joint venture in equity capital markets with ABN Amro, a Dutch bank, it moved from seventh to sixth in Europe and even came first in Britain. In America a newish business, repairing the finances of bankrupt companies, is booming, in competition with such bankruptcy veterans as Lazard and the Blackstone group.
Rothschild has benefited from worries about conflicts of interest in the big investment banks, which have brought independent merger advice into vogue. But will it be able to survive? Banking boutiques are not sustainable in the medium term, says Davide Taliente of Oliver, Wyman & Co, a consultancy. Their balance sheets are too weak. They cannot compete with the intellectual capital, infrastructure and advertising clout of their bigger rivals. Even so, John Tattersall of PricewaterhouseCoopers sees a future for Rothschild as an independent adviser on mergers and bankruptcies.
In a fast-changing financial industry, Sir Evelyn has preserved the family bank's old-world culture and somehow still attracted talented bankers, even though he paid about a third less than most competitors. Not that he is ungenerous. At Christmas, every Rothschild employee is given a frozen turkey: lorry-loads of kosher and non-kosher birds are delivered to headquarters, in St Swithin's Lane in London. This year, not many investment bankers will have a bonus as valuable.
Nice theft of the Economist's property -- graphics, text, trademark and all.
Terrible, just terrible. Please alert the owner of this site.
I'm turning in my FRePin today.
As a New Yorker once said as the Jewish Mayor of Dublin led the St. Patrick's Day parade, "Only in America."
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