N M Rothschild & Sons

N M Rothschild & Sons Limited
Type	Private company limited
Industry	Financial services
Founded	1811
Founder	Nathan Mayer Rothschild
Headquarters	London, United Kingdom
Key people	Peter Smith (Chairman)
Products	Investment banking, corporate banking, private equity, asset management, private banking
Revenue	£423.824 million (2015)[1]
Net income	£51.558 million (2015)[1]
Number of employees	2,800 (2014)
Parent	Rothschild & Co
Website	rothschild.com

N M Rothschild & Sons Limited or Rothschild Group (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 now serves as the British division of Rothschild & Co, a global firm with 57 offices around the world. It is the seventh oldest bank in continuous operation in the United Kingdom.

Rothschild's financial advisory division is known to serve British nobility, including the British Royal Family. Chairman Sir Evelyn Rothschild is the personal financial advisor of Queen Elizabeth II, and she knighted him in 1989 for his services to banking and finance.^[2]

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 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, 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.^[3]

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."^[4]

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.^[5]^[6] 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.^[7]

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.^[8]

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%. 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.^[9]

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.^[10]

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 privatisation. 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.^[11]

The price of gold was fixed for years, twice daily at 10:30 am and 3:00 pm, in a small room at N M Rothschild's London headquarters on St Swithin's Lane.^[12] 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. But until 2004, the meetings were a century-old tradition as great as the ringing of the bell at the New York Stock Exchange. That ritual is now a thing of the past.^[12]

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 the sixth biggest mergers and acquisitions adviser for completed deals worldwide in 2011.^[13] The firm is particularly strong in Europe, especially in France, Germany, Italy, the UK 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. Rothschild formed joint venture Jardine Rothschild Asia Capital with Jardine Strategic in 2007.^[14]

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.^[15]

Divisions

Rothschild operates through three divisions:^[16]

Debt Advisory and Restructuring
Mergers and Acquisitions
Equity advisory

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 Sir Evelyn Robert de Rothschild (b. 1931). In 1970, the firm converted from a partnership to a limited liability company.^[17] In 2003, following Sir Evelyn's retirement as head of N M Rothschild & Sons of London, it merged with Paris Orleans (now Rothschild & Co) under the leadership of the Swiss-based Rothschild Continuation Holdings, chaired by Baron David de Rothschild.^[18]

The Rothschild group went through a major restructuring the early 21st century. N M Rothschild & Sons is now the operating company in the UK. It is indirectly controlled by Rothschild holding company, Rothschild Continuation Holdings AG, registered in Zug, Switzerland. 72.5% of Rothschild Continuation Holdings is^[19] controlled by the Dutch-registered Concordia BV. Concordia is wholly controlled by the English and French Rothschilds.^[17] Until 2008, the only non-family interest was Jardine Matheson Holdings (Jardines), a hong that owns the other 20% of Rothschild Continuation Holdings, which owns the investment bank's London-based arm, N M Rothschild & Sons, as well as its operations in North America and Australia.^[20] The stake was acquired in 2005 from Royal & Sun Alliance (formerly Sun Alliance) through the Jardine Strategic subsidiary, which specializes in leveraging stakes to protect family owners.^[21] Rothschild turned around in 2005 after several years of losses.^[20] Jardines acted as Rothschilds' China agent from 1838 onwards. Sun Alliance took a 21.5% stake in Rothschild Continuation Holdings to help it deal with the death duties; 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.^[20]^[22] 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.^[23]

New Court headquarters

Rothschild's headquarters in London have been continuously located at the same site for the past two centuries, at New Court, St. Swithin's Lane. A lease on the original building was acquired in 1809.^[24] A new building was designed by Thomas Marsh Nelson in the Italian "palazzo" style in 1865.^[25] 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 six-storey glass-and-steel building on the site.^[26]

As before, the firm decided in 2005 to demolish the New Court and build a taller 15-storey glass-and-steel building, again on the same site. This fourth incarnation of New Court was designed by Rem Koolhaas and his Office for 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".^[27]^[28]

Litigation