N M Rothschild & Sons - Rothschild Investment Bank

N M Rothschild & Sons Limited, commonly referred to as Rothschild, is a British multinational investment banking company, controlled by the Rothschild family. It was founded in the City of London in 1811 and is now part of a global firm with 50 offices around the world. It is the world's 31st oldest bank in continuous operation.

History

In the late 18th century and early 19th century, Mayer Amschel Rothschild rose to become one of Europe's most powerful bankers in the principality of Hesse-Kassel (Hesse-Cassel) 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, to England. Nathan Mayer Rothschild first settled in Manchester, where he established a business in finance and textile trading. He later moved to London, where he founded N M Rothschild & Sons in 1811, through which he made a fortune with his involvement in the government bonds market.

According to historian Niall Ferguson, "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, J P Morgan and probably Goldman Sachs too -- as well, perhaps, as the International Monetary Fund, given the nineteenth-century Rothschild's role in stabilising the finances of numerous governments."

Early 19th century

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. 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.

Late 19th century

Nathan 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.

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 in France 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 percent. 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.

20th and 21st centuries

The 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, and increased focus on mergers and acquisitions and asset management.

In the 20th century, Rothschild developed into a preeminent 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 privatisation, where the company was involved from the beginning and developed a pioneering role which spread out to over thirty countries worldwide. In recent years, Rothschild advised on nearly a thousand completed mergers and acquisitions, having a cumulative value in excess of US$1 trillion. Next to this, Rothschild also advised on some of the largest and most high-profile corporate restructurings around the world. Today the price of gold is still fixed, twice a day, at 10.30 am and 3.00 pm at the premises of N M Rothschild by the world's main Bullion Houses: Deutsche Bank, HSBC, ScotiaMocatta and Societe Generale. Informally, the gold fixing provides a recognized rate that is used as a benchmark for pricing the majority of gold products and derivatives throughout the world's markets.

Every day at 1030 and 1500 local time, five representatives of the banks meet in a small room at Rothschild's London headquarters on St Swithin's Lane. In the centre is the chairperson, who is traditionally appointed by the Rothschild bank, although the bank itself has largely withdrawn from trading. The price of gold is fixed twice a day by five members of the London Bullion Association: Barclays Capital, Deutsche Bank, Scotiabank, HSBC and Societe Generale, and they conduct their twice-daily meeting over the telephone. Today this is mere financial necessity, but until 2004, it was also a century-old tradition as great as the ringing of the bell at the New York Stock Exchange. The five distinguished representatives included a Rothschild, and they met in person in a panelled room at the London office of N M Rothschild & Sons. That ritual is now a thing of the past.

Operations

Overview

Rothschild is consistently in the top 10 global investment banks for mergers and acquisitions (M&A) advisory. According to Thomson Financial data, Rothschild ranked as 6th biggest mergers and acquisitions adviser for completed deals worldwide in 2011. The firm is particularly strong in Europe, especially in the UK, France, Germany, Italy, and the Benelux countries, in each of which Rothschild consistently holds a top league table position. Rothschild's strength also extends to Eastern Europe, Asia, and the Americas Latin America.

The firm competes against a wide range of investment banks, from conglomerates like JPMorgan Chase, Goldman Sachs and Morgan Stanley, to other mergers and acquisitions specialists like Lazard, Moelis and Greenhill & Co. in M&A, valuation and restructuring advisory services.

Divisions

Rothschild operates through three divisions:

• Global Financial Advisory (GFA) (Rothschild's investment banking practice)
• Corporate Banking
• Private Banking and Trust

Next to these three main divisions, Rothschild is also active in real estate, venture capital, and asset management.

Corporate structure

In the 20th century, the London banking house continued under the management of Lionel Nathan de Rothschild (1882-1942) and his brother Anthony Gustav de Rothschild (1887-1961) and then to Sir Evelyn Robert de Rothschild (b. 1931). In 1970, the firm converted from a partnership to a limited liability company. In 2003, following Sir Evelyn's retirement as head of N M Rothschild & Sons of London, it merged with Paris Orleans SA under the leadership of the Swiss-based Rothschild Continuation holdings, chaired by Baron David de Rothschild.

The Rothschild group went through a major restructuring the early 21st century. N M Rothschild & Sons are now the operating company in the UK. It is indirectly controlled by the main Rothschild holding company, Rothschild Continuation Holdings AG, registered in Zug, Switzerland. 72.5% of Rothschild Continuation Holdings is controlled by the Dutch-registered Concordia BV. Concordia is wholly controlled by the English and French Rothschilds. Until 2008, the only non-family interest was Jardine Matheson, a hong which holds the other 20% of Rothschild Continuation Holdings. The stake was acquired in 2005 from Royal & Sun Alliance through the Jardine Strategic subsidiary, which specializes in leveraging stakes to protect family owners. Jardines acted as Rothschilds' China agent from 1838 onwards. However, on 19 November 2008, Rabobank announced it intended to acquire 7.5% of Rothschild Continuation Holdings, ostensibly to cement an alliance in food and agricultural finance. FT Alphaville claimed that the move was intended to help Rothschild gain access to a wider capital pool, and enlarge its presence in East Asian markets.

New Court headquarters

Rothschild's headquarters in London have been continuously located at the same site over the past two centuries, at New Court, St. Swithin's Lane. In the 1950s, the firm outgrew its New Court headquarters and took up space in nearby Chetwynd House. Eventually, in October 1962, at the suggestion of Evelyn Robert de Rothschild, the firm demolished New Court and built a 6-story glass-and-steel building on the same site.

In the 1980s and 1990s, Rothschild outgrew its New Court headquarters for a second time, and now operates out of several buildings on St. Swithin's Lane, including 1 King William Street, which was originally the site of the first Gresham Club.

As before, the firm decided in 2005 to demolish the New Court and build a taller 15-story glass-and-steel building, again on the same site. This third incarnation of New Court was designed by Rem Koolhaas and his Office of Metropolitan Architecture (OMA) and provides 20,992 square metres of office space in a building of 75 metres height (with associated plant, servicing and car parking). The new building opens up views of St Stephen Walbrook church from its lobby, and views of the London skyline from a roof-top "sky pavilion". Construction took place over a 30-month period from March 2008 to August 2010, so the building was completed shortly after Rothschild celebrated its 200-year anniversary.

Office locations

Litigation

NM Rothschild & Sons Ltd -v- Rothschild & Co (UK) Ltd

On 27 January 2009 NM Rothschild & Sons Ltd filed under s.69(1)(b) 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.

Awards

Rothschild has received many awards in recognition of its M&A and restructuring advisory in various countries from Acquisitions Monthly, Financial Times Mergermarket, Financial News, and Euromoney.

Notable current and former employees

(excluding many notable members of the Rothschild family)

Business

• René-Pierre Azria - Director of Jarden Corporation; Managing Director of Blackstone Indosuez
• Dominic Barton - Worldwide Managing Director of McKinsey & Company
• Franco Bernabè - CEO of Telecom Italia; Director of PetroChina
• Michel de Carvalho - Vice-Chairman of Investment Banking of Citigroup; Director of Heineken International
• José María Castellano - CEO of Inditex Group
• Sir John Collins - CEO of Shell UK; Chairman of National Power
• Alfonso Cortina - Chairman and CEO of Repsol
• Douglas Daft - Chairman and CEO of The Coca-Cola Company; Director of The McGraw-Hill Companies
• Dudley Eustace - Chairman of The Nielsen Company, Vice-Chairman of Royal Philips Electronics
• Pehr G. Gyllenhammar - Chairman of Aviva; Founder of European Round Table of Industrialists
• Jay Hambro - CIO of Petropavlovsk; CEO of Aricom
• Sir Graham Hearne - Deputy Chairman of Gallaher Group; Chairman and CEO of Enterprise Oil
• Henry Keswick - Chairman of Jardine Matheson Holdings; Director of Mandarin Oriental
• James Lawrence - Chairman of L.E.K. Consulting; CFO of Unilever
• Lord Leach of Fairford - Director of Jardine Matheson Holdings; Chairman of Open Europe
• Sir Carl Meyer - Deputy Chairman of De Beers; Governor of the National Bank of Egypt
• Baron Moser - Chairman of British Museum; Chairman Economist Intelligence Unit
• Paul Myners - Chairman of Guardian Media Group; Chairman of Marks & Spencer
• Robert S. Pirie - Senior Managing Director of Bear Stearns & Co.
• Gerald Rosenfeld - Head of Investment Banking of Lazard
• Wilbur Ross - Famous investor and billionaire
• Trevor C. Rowe - Director of the Australian Stock Exchange; Chairman of United Group; Chairman of Queensland Investment Corporation (QIC)
• Anthony Salz - Senior Partner of Freshfields Bruckhaus Deringer; Acting Chairman of Board of Governors of the BBC
• Peter Smith - Chairman of Coopers & Lybrand; Chairman of Savills
• Raymond W. Smith - CEO of Bell Atlantic; Chairman of Verizon
• Baron Vallance of Tummel - Vice-Chairman of Royal Bank of Scotland; Chairman of British Telecom

Politics and public service

• Baron George - Governor of the Bank of England (1993-2003)
• Thierry Breton - French Minister of Economy, Finance and Industry (2005-2007)
• Gerhard Schröder - Chancellor of Germany (1998-2005)
• Liam Byrne - Minister of State at the Home Office (2006-2010); Minister of State at Her Majesty's Treasury (2008-2010)
• John Kingman - Chief Executive of UK Financial Investments Limited
• Baron Lamont of Lerwick - Member of the British Parliament (1972-1997); Chancellor of the Exchequer (1990-93)
• Sir Edwin Leather - Member of the British Parliament (1950-1964); Governor of Bermuda (1973-1977)
• Oliver Letwin - Chairman of the Conservative Research Department; Minister of State for Policy
• René Mayer - President of France (1953)
• Baron Neuberger of Abbotsbury - Lord of Appeal in Ordinary (2007-present)
• Georges Pompidou - President of France (1969-1974)
• John Redwood - Member of the British Parliament (1987-present)
• Felix Rohatyn - United States Ambassador to France (1997-2000)
• Goh Keng Swee - Deputy Prime Minister of Singapore (1973-1984); Minister of Finance (1959-1965;1967-1970)
• Baron Wakeham - Leader of the House of Lords (1992-1994); Leader of the House of Commons (1987-1989)

Armed forces

• General Baron Guthrie of Craigiebank - Chief of the General Staff (1994-1997); Chief of the Defence Staff (1997-2001)

References

Array

Books

• Ferguson, Niall (1999). The House of Rothschild: Volume 1: Money's Prophets: 1798-1848. New York: Penguin Group. ISBN 0-14-024084-5. 
• Ferguson, Niall (2000). The House of Rothschild: Volume 2: The World's Banker: 1849-1999. New York: Penguin Group. ISBN 0-14-028662-4. 
• Ferguson, Niall (2000). The Cash Nexus: Money and Power in the Modern World, 1700-2000. New York: Penguin Group. ISBN 0-465-02325-8. 
• Kaplan, Herbert H. (2006). Nathan Mayer Rothschild and the Creation of a Dynasty: The Critical Years 1806-1816. Stanford: Stanford University Press. ISBN 978-0-8047-5165-0. 

Array

External links

• Official site
• N M Rothschild & Sons companies grouped at OpenCorporates
• M&A Ranking 2011, Thomson Reuters
• Official site of the Rothschild Archive
• "Rothschild lords it over dealmakers" (Sunday Times article).

Interesting Informations

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