Rothschild & Co
Rothschild & Co is a multinational private and alternative assets investor, headquartered in Paris, France and London, England. It is the flagship of the Rothschild banking group controlled by the British and French branches of the Rothschild family. The banking business of the firm covers the areas of investment banking, restructuring, corporate banking, private equity, asset management, and private banking. It is also known to serve as the advisor and lender to governments and major corporations.[6] In addition, the firm has its own investment account in private equity. Rothschild's financial advisory division is known to serve British nobility as well as the British royal family. Past chairman Sir Evelyn Robert de Rothschild was the personal financial advisor of Queen Elizabeth II, and she knighted him in 1989 for his services to banking and finance.[7] HistoryRothschild & Co is the result of a merger between the French and British houses of Rothschild, each with individual but intertwined histories. British history (N M Rothschild & Sons)Late 18th centuryIn the late 18th century and early 19th century, Mayer Amschel Rothschild (1744–1812) rose to become one of Europe's most powerful bankers in the Landgraviate of Hesse-Kassel in the Holy Roman Empire. In pursuit of expansion, he appointed his sons to start banking operations in the various capitals of Europe, including sending his third son, Nathan Mayer Rothschild (1777–1836), to England.[8] Early 19th centuryNathan Mayer Rothschild first settled in Manchester, where he established a business in finance and textile trading. He later moved to London, founding N M Rothschild & Sons in 1811 at New Court, which is still the location of Rothschild & Co's London headquarters today.[9] Through this company, Nathan Mayer Rothschild made a fortune with his involvement in the bond market.[10] According to historian Niall Ferguson in 1999, "For most of the nineteenth century, N M Rothschild was part of the biggest bank in the world which dominated the international bond market. For a contemporary equivalent, one has to imagine a merger between Merrill Lynch, Morgan Stanley, JP Morgan Chase & Co. and probably Goldman Sachs too—as well, perhaps, as the International Monetary Fund, given the nineteenth-century Rothschild's role in stabilizing the finances of numerous governments."[10] During the early part of the 19th century, the Rothschild London bank took a leading part in managing and financing the subsidies that the British government transferred to its allies during the Napoleonic Wars. Through the creation of a network of agents, couriers and shippers, the bank was able to provide funds to the armies of the Duke of Wellington in Portugal and Spain. In 1818 the Rothschild bank arranged a £5 million loan to the Prussian government and the issuing of bonds for government loans. The providing of other innovative and complex financing for government projects formed a mainstay of the bank's business for the better part of the century. N M Rothschild & Sons' financial strength in the City of London became such that by 1825, the bank was able to supply enough coin to the Bank of England to enable it to avert a liquidity crisis.[11] Like most firms with global operations in the 19th century, Rothschild had links to slavery, even though the firm was instrumental in abolishing it by providing a £15m gilt issue necessary to pass the Slavery Abolition Act of 1833.[12][13] The money provided by Rothschild was used to pay slave owners compensation for their slaves and the gilt issue was only fully redeemed in 2015.[14] Late 19th centuryNathan Mayer's eldest son, Lionel de Rothschild (1808–1879) succeeded him as head of the London branch. Under Lionel the bank financed the British government's 1875 purchase of a controlling interest in the Suez Canal. Lionel also began to invest in railways as his uncle James had been doing in France. In 1869, Lionel's son, Alfred de Rothschild (1842–1918), became a director of the Bank of England, a post he held for 20 years. Alfred was one of those who represented the British Government at the 1892 International Monetary Conference in Brussels.[16] The Rothschild bank funded Cecil Rhodes in the development of the British South Africa Company and Leopold de Rothschild (1845–1917) administered Rhodes's estate after his death in 1902 and helped to set up the Rhodes Scholarship scheme at Oxford University. In 1873 de Rothschild Frères (trans. "The Rothschild Brothers") of Paris and N M Rothschild & Sons of London joined with other investors to acquire the Spanish government's money-losing Rio Tinto copper mines. The new owners restructured the company and turned it into a profitable business. By 1905, the Rothschild interest in Rio Tinto amounted to more than 30%. In 1887, the French and English Rothschild banking houses loaned money to, and invested in, the De Beers diamond mines in South Africa, becoming its largest shareholders.[17] 20th centuryThe First World War marked a change of fortune and emphasis for Rothschild. After the War, the Rothschild banks began a steady transition towards advisory work and finance raising for commercial concerns, including the London Underground. In 1938, the Austrian Rothschilds’ interests were given to the Nazis, bringing to an end more than a century at the heart of Central European banking. In France and Austria, the family was scattered for the duration of the Second World War. After the war, the British and French banks committed themselves to further developing their new operation in the United States, which was eventually to become Rothschild Inc,[18] and increased focus on mergers and acquisitions, asset management, and merchant-banking.[19] In the 20th century, Rothschild developed into a pre-eminent global organisation, which enhanced its ability to secure key advisory roles in some of the most important, complex and recognizable mergers and acquisitions. In the 1980s, Rothschild took a leading role in the international phenomenon of privatization. The company was involved from the beginning and developed a pioneering role which spread out to more than thirty countries worldwide. In recent years, Rothschild advised on nearly a thousand completed mergers and acquisitions with a cumulative value in excess of US$1 trillion. Rothschild also advised on some of the largest and most high-profile corporate restructurings around the world.[20] The bank decided to enter the securities market buying Smith Brothers, a stock jobber, in December 1983.[21] The price of gold was fixed for years, twice daily at 10:30 am and 3:00 pm, in a small room at Rothschild's New Court headquarters on St Swithin's Lane.[22] The world's main bullion houses: Deutsche Bank, HSBC, Scotia-Mocatta and Société Générale used the agreed rate as a price benchmark for gold products and derivatives in the world's markets. The chairperson, traditionally appointed by the Rothschild bank, sat in the center, although the bank itself has largely withdrawn from trading. The five members of the London Bullion Association: Barclays Capital, Deutsche Bank, Scotiabank, HSBC and Société Générale, now conduct their twice-daily meetings over the telephone. The meetings were a tradition as great as the ringing of the bell at the New York Stock Exchange until 2004.[23] French history (Paris Orléans)19th centuryThe Compagnie du chemin de fer de Paris à Orléans was founded in 1838 as a railway company. After several takeovers and a merger with the Chemins de fer du Midi, it had about 11,000 km (6,800 mi) of track and was one of the major railway companies in France. In 1938, it was nationalised along with five other railway undertakings to form the national state railway company SNCF.[24] 20th centuryAfter the Second World War, the French branch of the Rothschild family took over the remains of Paris Orléans and transformed it into a holding company for its banking activities and corporate investments. These mainly included the Banque Rothschild (bank), the SGIM (property company), the SIACI (insurance), the Francarep (oil company) and the SGDBR (wineries), now Domaines Barons de Rothschild (DBR).[25] By 1980, the Paris business employed about 2,000 people and had an annual turnover of 26 billion francs ($5 billion in the currency rates of 1980).[26] The Socialist French government of François Mitterrand nationalized the Banque Rothschild and renamed it Compagnie Européenne de Banque in 1981.[27] In 1983, David de Rothschild and Eric de Rothschild recapitalized the family's business just as their ancestors had done in the prior century under the name Paris Orléans, as it was banned from using the family name until 1986,[28] at which time the firm was renamed Rothschild & Cie Banque.[29] Modern history and recent eventsAnglo-French Rothschild mergerIn 2003, the English (N M Rothschild & Sons) and French (Rothschild & Cie Banque) firms announced plans to merge under the leadership of David R. de Rothschild. Paris Orléans SCA became the flagship holding company of the family business of Rothschild. Although Paris Orléans is listed on the exchange, the family retains control of the firm.[30][31] After the merger of the banking activities, Paris Orléans SCA became the sole owner Concordia BV, which controls Rothschilds Continuation Holdings AG, which controls the Rothschild Group's banking activities.[32] By 2011, the firm had merged operations and was unified.[33] Recent historyIn 2007, Rothschild formed joint venture Jardine Rothschild Asia Capital with Jardine Strategic, specializing in growth capital investments.[34] In 2010, the firm appointed the first non-family member chief executive officer, Nigel Higgins.[35][36] In 2011, the firm rebranded from "N M Rothschild & Sons" to "Rothschild & Co."[37] The goal of this was to show "a new global positioning as the fulcrum of the Financial Market."[38] In 2015, the parent company Paris Orléans changed its name to Rothschild & Co to match the trade name of the business.[39] In 2017, Rothschild & Co acquired the family-controlled French private bank Martin Maurel.[40] This merger united the businesses of two European financial families. After the acquisition, Rothschild & Co became the leading private bank in France.[41] In 2018, Rothschild & Co sold its trust services division (responsible for the creation and administration of trust structures) to Richard Martin,[42] a long-time Rothschild executive for an undisclosed amount. This restructuring of Rothschild's Wealth Management practice allowed the firm to focus more on its private banking activities from the recent purchase and integration of Rothschild Martin Maurel.[40] In 2019, the firm acquired a stake in Redburn,[43] a global financial services firm that provides research in various coverage sectors and brokerage execution services for traditional and algorithmic sales and trading.[44] In 2022, Wintrust announced a deal to acquire the U.S. asset management arm of Rothschild, which held around $8 billion in assets under management at the time.[45] In 2023, the Rothschild family announced its intention to take Rothschild & Co. private by repurchasing the shares listed on stock exchanges.[46][47] The transaction values the firm at €3.7bn[48] and would end several decades of the firm being publicly listed.[49] OperationsRothschild & Co has three primary businesses: Global Advisory (Investment Banking Division), Wealth and Asset Management, and Five Arrows (Alternative Assets Division). Global Advisory (Investment Banking Division)The banking business is structured as follows:[50]
Rothschild & Co is consistently in the top 10 global investment banks for mergers and acquisitions (M&A) advisory by Thomson Reuters by both number and size of deals.[51] In 2018, as with previous years, the firm ranked 1st globally and 1st in Europe by number of completed M&A transactions.[52] Wealth and Asset ManagementRothschild & Co's wealth management practice stems on wealth preservation through generations, just as the Rothschild family has done for over two centuries. The words of one of Mayer Amschel Rothschild's sons and founder of Rothschild & Co still illustrate the service provided to clients:
Five ArrowsFive Arrows is the alternative assets arm of Rothschild & Co, deploying the firm's capital alongside private and institutional investors. Five Arrows manages assets of €26 billion across private equity and private credit strategies.[54] VineyardsHistorically, the Rothschild family has owned many Bordeaux vineyards since 1868. Les Domaines Barons de Rothschild (Lafite) and Champagne Barons de Rothschild are some of the wineries owned in part by Rothschild & Co.[55][56] Corporate cultureRothschild & Co has a unique culture in part due to its more than two-century history and the firm still remaining under family control.[57] The firm's new analyst education program in London, for instance, lasts nearly two months.[58] New Court headquartersRothschild & Co's headquarters in London have been continuously located at New Court, St. Swithin's Lane, London for over two centuries. After acquiring the lease in 1809,[59] the firm continued to grow. In 1865, a new building designed by Thomas Marsh Nelson in the Italian "palazzo" style was created at the same site.[60] This building served as the headquarters for Rothschild through both world wars. In 1962, the firm demolished and rebuilt its New Court headquarters for a third time at the suggestion of Evelyn Robert de Rothschild.[61] In 2005, the firm decided to create a fourth iteration of the building that opens up views of St Stephen Walbrook church from its lobby, and views of the London skyline from a rooftop "sky pavilion" designed by Rem Koolhaas and his Office for Metropolitan Architecture (OMA).[62][63] Controversies and legal issuesJürg Heer scandalJürg Heer worked for Rothschild Bank AG (since October 2018 Rothschild & Co. Bank AG) in Zurich for more than twenty years, the last nine as its credit manager. He was dismissed in June 1992. Heer was accused of taking kickbacks of more than US$20 million in exchange for making unsecured and unapproved loans to the German and Canadian real estate magnate Karsten von Wersebe resulting in a loss of US$155 million to the bank. In 1998, in the district court of Zurich, Heer confessed that he embezzled about US$33 million from Rothschild Bank AG between 1986 and 1992.[64][65] The Rothschild family committed CHF 150 million to supporting its bank in recovering from one of the then largest financial frauds in Switzerland.[66] NM Rothschild & Sons Ltd vs. Rothschild & Co (UK) LtdOn 27 January 2009 NM Rothschild & Sons Ltd filed under s.69(1)(b) of the UK Companies Act 2006 for a change of name of the respondent company, Rothschild & Co (UK) Ltd, which had been registered since 31 October 2008. The Company Names Tribunal found for the applicant and ordered the respondent to change its name or else have its name changed by the adjudicator, as well as to pay the applicant's costs.[67] Von Schönau-Riedweg vs. Rothschild Bank AG & othersOn 20 December 2012 Rothschild Bank AG brought suit against its client Corinna von Schönau-Riedweg in Switzerland, seeking a declaration that the bank had no liability with respect to the private equity transactions recommended by Rothschild Bank's former employee Wilfrid von Plotho.[68] As a reaction to this suit von Schönau brought suit in the Superior Court in Boston/USA against Rothschild Bank AG, Rothschild Trust (Schweiz) AG, Wilfrid von Plotho and others. In December 2014 a separate and final judgment over US$15 million against von Plotho and his Panamanian offshore company ARA Management was entered in force; neither von Plotho nor ARA Management appealed from that judgment.[68] In June 2019 the Appeals Court of Massachusetts (Boston) decided that von Schönau's suit against Rothschild Bank should be revived, as she had made a showing that Wilfrid von Plotho, she claims caused her millions of dollars to lose, was Rothschild Bank's agent in Switzerland as well as in the USA.[69] Non-Prosecution Agreement with the U.S. Department of JusticeAccording to the Non-Prosecution Agreement with the U.S. Department of Justice (Tax Division) of June 2015, Rothschild Bank (now Rothschild & Co. Bank AG) admitted that it had 66 U.S.-related accounts held by entities created in Panama, Liechtenstein, British Virgin Islands or other foreign countries with U.S. beneficial owners. Knowing it was highly probable that the U.S. clients were engaging in schemes to avoid U.S. taxes, Rothschild Bank permitted the accounts to trade in U.S. securities without reporting account earnings, or transmitting any withholding taxes, to the IRS.[70] Of the U.S. related accounts with an aggregate maximum balance of approximately US$836 million had U.S. beneficial owners, representing approx. 5% of the aggregate maximum balance of Rothschild Bank's total assets under management during the period in question.[70] In recognition of its illegal conduct Rothschild Bank agreed to pay US$11,510,000 as a penalty to the U.S. Department of Justice without having to admit any guilt in the matter.[71][72] 1MDB Malaysian sovereign wealth fund scandalRothschild Bank AG (since October 2018 renamed Rothschild & Co. Bank AG), a subsidiary of Rothschild & Co,[73] broke anti-money-laundering rules in 1MDB case according to Swiss prosecutiors.[74] In July 2018 the Swiss Financial Market Authority (FINMA) concluded final 1MDB proceedings, in which Rothschild Bank AG and its subsidiary Rothschild Trust (Schweiz) AG have been found to be in serious breach of money laundering rules in the context of 1 MDB. The FINMA appointed an audit agent to review enhancements already put in place by Rothschild Bank. FINMA stated, that Rothschild Bank and Rothschild Trust were found to be in "breach of due diligence, reporting and documentation requirements […]. Although there were early indications that this client could be involved in money laundering activities, the institutions decided nevertheless to enter into the relationship and at a later stage considerably expand it."[75] The 1MDB fraud saw billions of dollars siphoned off from the sovereign wealth fund into the pockets of corrupt officials.[76][77] Dispute between Rothschild & Co and Edmond de Rothschild GroupAfter Paris Orleans was renamed to Rothschild & Co, the Swiss-based Edmond de Rothschild Group disputed the use of the family name for branding purposes. Until their settlement, Rothschild & Co and the Edmond de Rothschild Group were cross-shareholders in each other's business, further complicating the matter. In 2018 the two sides of the family resolved the dispute.[78] Marjorie Taylor Greene "space laser" accusationIn January 2021, US Representative Marjorie Taylor Greene (R-GA) was reported to have made a Facebook post blaming "Rothschild, Inc" among others for using "space solar generators" to ignite the 2018 Camp Fire, one of California's deadliest and most destructive wildfires.[79] Notable current and former employeesMany notable people, including heads of state, CEOs, and billionaires have been involved with the firm. This partial list excludes the many notable members of the Rothschild family who have worked at the family firm. [80] Business
Politics and public service
Armed forces
See alsoReferences
Further reading
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