Banque Privee Edmond de Rothschild SA (SWX:RLD) is set to launch its new London-based merchant banking business this week to make London its fourth major business centre.
The Rothschild group has been hiring 20 senior advisors to launch its private banking and corporate finance division in London alongside its asset management unit.
London to be the fourth hub
Christophe de Backer, Edmond de Rothschild’s chief executive, told the Financial Times the Geneva-based group has three main hubs in Paris, Geneva and Luxembourg, with London set to be their fourth hub. He disclosed the group’s intention to enhance the return on equity to 11% by 2016.
The group already owns an asset management business in London which focuses on funds of hedge funds, as well as a fixed-income business. The group also has an emerging market-focused investment trust advisory unit and a small corporate finance unit.
Rothschild is one the largest independent financial advisory firms worldwide. Earlier it was reported that the British government had decided to hire Rothschild group as an advisor on the potential split of the Royal Bank of Scotland plc into a good bank and bad bank. The group was said to have beaten the competition from Deutsche Bank AG and Bank of America Merrill Lynch.
Last month, the UK chancellor sought the European Union’s permission to split Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS) (AMS:RBS) without being forced to adhere to new EU banking rules
Rothschild to capitalize full range of opportunities
Rothschild’s recent move to launch merchant bank in London is a strategy to capitalize on the full range of opportunities post-global financial crisis. The group aims to become a European leader and grow total assets under management from 120 billion euro to 155 billion euro by 2016.
In a statement, the company disclosed by adopting a global organization structure, the group has strengthened its presence in its core European markets, while pushing into Asia and South America and through partnerships in those countries where it is not yet present.
Daniel Schäfer in London of Financial Times points out that given its focus on entrepreneurs and wealthy families, Rothschild’s merchant bank is not at risk of a clash with other parts of the sprawling family such as NM Rothschild, one of the UK’s largest corporate finance advisory groups belonging to Paris-based Rothschild group.