Edmond de Rothschild lost its chairman as it wraps a major revamp. His widow and several other influential women decide where to take the bank without him.
The famously secretive Swiss Rothschild clan withdrew from the spotlight in 2019 when it delisted the eponymous Genevan bank. The death last month of owner Benjamin de Rothschild (pictured below, with Ariane de Rothschild), at 57, brings renewed focus to what is reportedly the wealthiest branch of the banking dynasty, dating back to the late 18th century.
Remarkably, Benjamin’s death doesn’t change much at all at the bank, which oversees 173 billion Swiss francs ($194 billion), the majority of it in its asset management arm. «The bank's governance had already been organized to deal with such an eventuality and it has no impact on the continuity of the business, Edmond de Rothschild said.
His wife, Ariane de Rothschild, chairs the bank and orchestrated its recent strategy overhaul. An ex-trader and «extraordinary fighter,» she amassed influence as her husband, who took over the bank at 34, increasingly retreated.
«Serious Stuff Is Ariane»
Benjamin, who had never shown an inclination for high society or rubbing shoulders with powerful politicians, was known in Genevoise parlance as «eccentric»: he might disappear for months at a time, for example.
«He was very nice when he could have a conversation, but the serious stuff was basically her [Ariane],» a Genevan banker told finews.com. There is no shortage of similar anecdotes about Benjamin, who reportedly struggled with substance abuse for years.
He admitted possession of heroin in 1997 and briefly detained in Paris in 2007 over an incident with a laser pointer and a police officer. «He was an absentee CEO, not by neglect, but his direction of travel was other than banking», as another long-standing observer told finews.com.
«No Door The Name Won't Open»
Rothschild loved the speed and rush of fast cars, boats, motorcycles and the adrenalin of big game hunting. Benjamin actually never was CEO: he enlisted a series of bankers to run Edmond de Rothschild, founded in 1953 by Benjamin’s father, who had fled France for Switzerland.
The private bank leans heavily on its impeccable name to win wealthy clients: «There is literally no door a Rothschild business card doesn’t open,» as one banker puts it. But by 2010, fissures had emerged in the sprawling and decentralized French-Swiss Rothschild empire.
Outspoken And Direct
Like all Swiss wealth managers, Edmond de Rothschild needed to reinvent itself after Switzerland abandoned banking secrecy. Long-standing CEO Claude Messulan left in 2012, and Rothschild poached HSBC’s top man in France, Christophe de Backer, to replace him.
De Backer’s tenure proved short-lived when three years later Benjamin installed Ariane, who had been on the board since 2008, as CEO. Ariane, who admits to ruffling feathers for being direct and outspoken, dug in and stressed the need to act: Rothschild’s profit had tumbled more than 11 percent to 56 million francs in the year she took over.
«Heritage» In Focus
The 55-year-old faced a chilly reception in Geneva, which she compared to that of Tidjane Thiam, her friend, at Credit Suisse in Zurich: «He often tells me that I am the blonde and he the black in the financial center. It makes us laugh,» she told Swiss daily «Le Temps» (in French) in 2016.
Benjamin withdrew even further from public view; he appeared visibly aged in one of the last of the few interviews he granted – about yacht-racing team Gitana – four years ago to French television. Meanwhile, Ariane set about modernizing the family’s holdings, tying together various related strands ranging from producing Brie de Meaux at the family’s farm in France, partnering its Bordeaux vineyards with a prestigious wine estate in Spain’s Ribera del Duero, or the Four Seasons in Megève.
Five-Year Whirlwind
These luxury activities are bundled under a «Heritage» entity: like the bank, they also lean heavily on the Rothschild cachet: «Panache is a way of being — it’s not vulgar,» Ariane told the «Financial Times» in 2018. That same year, she and Benjamin vowed to «blow Geneva’s socks off» with a «dare to be different»-themed bash for 1,000 clients, employees, and friends.
Behind the scenes, Ariane, who is described as caring, tough, blunt, and demanding by associates, was a whirlwind from 2015 until 2019, when she finally brought in Vincent Taupin (pictured below) as CEO of the bank. Edmond de Rothschild’s Luxembourg arm stumbled through a lengthy remediation after tainted assets related to the 1MDB scandal were found in 2015.
She also pulled the private bank out of Asia (2016), replaced the bank’s rickety technology with a pricey Avaloq platform (2017), buried a messy naming spat with the French-British Rothschilds (2018), merged the bank’s French operations into the Swiss-based group (2019), and delisted its shares last year.
Bank In Unhealthy State
Ariane's activism masks the fact that the bank still isn’t in a very healthy state: its cost-income ratio hit nearly 87 percent (by comparison, Julius Baer’s bettered to 66.4 percent last year). It has also bled assets since 2017.
She has surrounded herself with a coterie of acolytes including Taupin, a French veteran banker, his deputy Cynthia Tobiano, who oversees finance, and operating chief Sabine Rabald. Of the bank’s total 173 billion francs in assets, 70 billion francs sit in a private banking arm overseen by Michel Longhini, who Rothschild poached in 2019.
To be fair, Taupin has emphasized that assets under management aren’t what Rothschild is after to improve profitability: «It is useless to raise money at stupid prices,» he said 15 months ago. Like many wealthy, Ariane can be susceptible to a «I want it now»-mentality, which runs counter to the long-term nature of wealth management (and of the Rothschild clan itself).
No Heir Apparent
Ariane's detractors also criticize that she can waffle on important issues. This compares with the steady-and-sure course of the best comparable houses to Edmond to Rothschild: Pictet and LGT, which tend to make a decision, then stick with it and see it through, regardless of resistance or obstacles like losses.
Ariane’s thorniest issues may be at home: Nadine de Rothschild, her 88-year-old mother-in-law, reportedly grew so disgruntled with the management of Edmond de Rothschild that she pulled her money and went to Pictet instead. Ariane and Benjamin also don’t have an heir apparent: none of their four daughters (aged 25 to 18) are yet involved in the family business (three are still in school or at university while the eldest – Noemie – handles public relations for a video games company based in Montreal).
Merger Of Banking Families?
The holding requires maximum diplomacy: Benjamin’s half-sister owns nearly 17 percent of the family company, his mother also owns a nearly 17 percent stake, Ariane is entitled to one-quarter under Swiss law. Nadine inherited almost half of the artwork contained within the family’s chateau in Pregny, where Benjamin died on January 15, according to Swiss weekly «Le Matin Dimanche» (behind paywall, in French).
The family’s three generations of women need to collectively decide what to do with Edmond de Rothschild further out. Swiss banking blog «Inside Paradeplatz» (in German) reported that Julius Baer had sniffed around, but was dissuaded by what it viewed as an unrealistic price. For now, the issue is moot: Julius Baer is still in Finma's penalty box for PDVSA and prohibited from major acquisitions.
The long-standing Swiss rumor is a merger with Rothschild & Co, which has been far more assertive about growing its wealth management arm in recent years. At that bank, Alexandre de Rothschild took over three years ago for his father, David de Rothschild, with whom Ariane had fought bitterly over the naming issue. Neither Rothschild bank nor Julius Baer commented on the speculation.
Claude Baumann contributed reporting
