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Rothschilds merging operations in France, Britain
April 5, 2012 / 7:59 AM / 6 years ago

Rothschilds merging operations in France, Britain

* Banking dynasty to take full control of subsidiaries

* To convert into limited partnership

* Move will boost regulatory capital, strengthen family control

By Lionel Laurent

LONDON, April 5 (Reuters) - The Rothschild banking dynasty is to consolidate its operations in France and Britain under one holding company as it seeks to retain family control, and boost capital to withstand tougher regulations and economic slowdown.

It is a sign that even one of the most well-known names in banking, whose roots date back to the 18th century, cannot escape the regulators’ war on creating a safer banking industry after the global financial crisis of 2008.

Rothschild Group’s Paris-based holding company Paris Orleans will become a French limited-partnership structure favored by other family-owned companies like Michelin or Hermes, which makes hostile takeovers virtually impossible.

The umbrella company will buy out minority interests in subsidiaries such as British-based N.M. Rothschild & Sons., the London-based investment bank, said late on Wednesday.

It will also acquire outstanding minority stakes in its France-based financial advisory and asset-management businesses.

David de Rothschild, who will become chairman of the new vehicle, said the restructuring would allow the group to become more competitive against rivals while ensuring the family’s control over the group in the long-term.

Regulatory capital will be “significantly enhanced” to prepare for tougher requirements under harsh new global rules for capital buffers known as the Basel III regime.

The race to adapt to the Basel rules, designed to crack down on banks’ risk-taking in the wake of the 2008 financial crisis, has seen banks across the industry slash jobs and sell assets to cut costs and shrink their balance sheets.

Under French law, the changes planned by Rothschild will trigger a forced buyout offer for all of the minority shareholders in the Paris Orleans umbrella company.

The offer, guaranteed by investment bank Natixis, will offer a price of 17 euros per share, or a premium of 4.2 percent on Wednesday’s closing price, Rothschild said.

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