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Rothschild Plans To Consolidate European Wealth Management Activities

Lisa Ugur, Tax-news.com, London

01 November 2000

NM Rothschild & Sons, one of the oldest names in banking, is considering establishing a dedicated "wealth management" operation. Rothschild, which provides a range of services to high-net-worth individuals including private banking, asset management and private equity services, has its main private banking unit headquartered in Zurich, but the new operation would combine activities in Switzerland, the UK and France.

Rothschild is presently discussing proposals and nothing concrete has yet materialised. The move is part of an attempt by the group to re-establish itself as the premier provider for the European super-rich. Changes are expected under Baron David de Rothschild, the head of the Rothschild family's French operation and the expected successor to his cousin, Sir Evelyn de Rothschild, the current chairman of NM Rothschild.

The plans being mooted at Rothschild are not entirely unexpected. Major US banks, notably JP Morgan and Merrill Lynch, are looking to build up their influence in the the wealth management market, establishing specialist products for high net worth individuals. Rothschild's plans are a direct response to growing international competition, plus the fact that the wealthy are growing in numbers, particularly in Europe.

In a survey jointly produced by Merrill Lynch and Gemini Consulting, the number of people with US$1m of liquid assets rose to 7 million around the world - up by more than 1 million in just one year. The number of mega-rich people - with at least US$30m in disposable income - rose by more than 18 per cent to 55,400. One reason was the growing number of people choosing to sell their private businesses, usually via flotations, especially in Europe.

Rothschild already manages about US$21bn of assets for the extremely wealthy. The cash is generally divided up between mainstream funds and alternative investments such as property, paintings and private equity.

Paul Manduca, head of Rothschild Asset Management, the fund management arm of NM Rothschild, said 'the whole issue of wealth management is being looked at closely', adding that 'there is no greater name in the business of managing family fortunes.' One option being considered is the creation of a new division, under a head of wealth management. This would have oversight of the wealth management activities in Zurich, London and Paris, including the Rothschild Trust.

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