The Rothschild dynasty is to merge its British and French banking operations to secure long-term control of the business and to boost the firm’s financial strength ahead of the introduction of tougher capital requirements for banks.
The 200-year-old banks will be reunited under a single shareholding that will bring together the fortunes of the French and English sides of the renowned family as they attempt to safeguard the business against the effects of new regulation and the fallout from the global financial crisis.
Paris Orleans, the Rothschild Group’s Paris-based holding company, will convert into a French limited partnership, securing the families’ control of the bank against potential takeovers. The new partnership will then buy out minority investors in NM Rothschild & Sons, the UK business, as well as outstanding minority interests in the French operations.
David de Rothschild will become chairman of the partnership and said the new structure would help the bank “better meet the requirements of globalisation in general and in our competitive environment in particular, while ensuring my family’s control over the long term”.
Mr de Rothschild is a descendant of Baron James de Rothschild, who established the family’s Paris-based bank 200 years ago.
Changing the ownership structure is aimed at helping Rothschild meet the Basel III capital standards that will require banks to maintain a minimum core capital ratio of 7pc. Rothschild said its regulatory capital would be “significantly enhanced” through the merger.
Paris Orleans has a market value of more than €500m (£415m) and is about 30pc owned by outside investors. Rothschild is offering €17 per share to minority investors, a small premium to the company’s current market price.
The Rothschild Group employs 3,000 people in 42 countries and is one of the world’s leading independent investment banks, advising some of the largest international companies on capital raisings and mergers and acquisitions.
In addition to investment banking, Rothschild also provides asset management services as well as wealth management advice. The bank also remains a player in the private equity industry and operates several merchant banking operations that invest directly in business across Europe and the rest of the world.
In a break from tradition, two years ago Rothschild appointed Nigel Higgins as its chief executive, marking the first time a non-family member had been given the top job at the bank.