David de Rothschild on Brexit, banking and Macron
Anne-Sylvaine Chassany, FT. com, Mar 21 2018
75-year-old David de Rothschild and I (were) sipping our second espressos and pondering François Hollande’s romantic exploits. For a second I wonder how Hollande’s love life fits in with our conversation, the first time the French Rothschild patriarch has truly let his guard down after an hour and a half of lively but careful discussion. Hollande is to serve as a counterpoint to his successor Emmanuel Macron, a Rothschild alumnus. Macron’s former employer is keen to emphasise the 40-year-old president’s qualities and says:
François is very smart. He is a man of culture. He is pleasant. But essentially, why is he out? Because he couldn’t decide! Because he always hesitated! He lost credibility abroad, and came to the conclusion that he shouldn’t run again. It’s extraordinary! I prefer the decisive Macron, whose main interest is to succeed! Because what does a man his age want? Not honours now and failure tomorrow!
Macron spent a little over three years at the Franco-British investment bank before entering politics. A few weeks ago, David handed over the reins of the family bank to his son Alexandre, a 37-year-old former private equity analyst. Succession is a momentous event in the life of a Rothschild, a dynasty started in the Frankfurt Jewish ghetto in the 18th century. Of the five branches started by Mayer Amschel’s sons in the UK and across the continent, the Paris and London banks are testament to the family’s position in Europe’s history, from lenders to warmongering states in the 19th century to modern financiers, fine winemakers and members of the jet set. David portrays it as the outcome of a 10-year grooming in which Alexandre proved his worth, starting the bank’s private equity fund management business and recently helping to settle a dispute with Swiss relatives over the use of the Rothschild name. David took over from his father Guy in 1982, when the bank was nationalised by Socialist president François Mitterrand. The French Rothschilds were financially compensated, but lost their banking licence and the right to use their own name, hence their raison d’être. Behind his spectacles, David’s eyes blink faster as he tells of employees in tears, forced holidays and going to the movies on the Champs-Elysées on Wednesday afternoons. This was the second time in barely four decades that the business had been all but destroyed. In the late 1930s his German mother sought refuge in New York, via Buenos Aires, fleeing the Nazis. He was born in 1942 in the Big Apple and became the first newborn registered as “Free French” at the consulate, he says with pride. His father, who during the war had joined the resistance in London against the collaborationist government of Marshal Pétain, threw in the towel. He wrote in Le Monde:
Jews under Pétain! Pariahs under Mitterrand! Ça suffit! Rebuilding from the rubble twice in one life is too much!
With a few associates and loyal clients, David set off to start all over again. He says:
My situation was very different from any other Rothschild because there was nothing left and everything had to be built (from scratch). At the age of 40, I was starting my life. I felt no pressure or anxiety about succeeding my father. I was viewed as an entrepreneur, the creator not the heir, which is easier to bear. It means you own your successes and failures. Alexandre is taking over a well-functioning machine of a certain size.
He reveals that Mitterrand’s justice minister Robert Badinter was instrumental in getting his banking licence back in 1984. The name followed two years later, when Chirac privatised the bank.
He told Mitterrand: “You cannot strip the Rothschild family of their trade and their life in France.”
The socialist leader acquiesced (meekly). Early on, David had the intuition that success would depend more on his ability to attract talent than on his banking skills. he says:
I never sought to compete with the investment bankers, whose sophistication and technical skills were far greater than mine. It’s no false modesty. It’s just being realistic. My main problem was to pick the people with the best qualities, but ones who would not keep their cards to their chests.
David de Rothschild’s overarching obsession was to “preserve the family ownership,” and this meant shunning lending activities, which would have required external capital and diluting the family shareholding. It was only “coincidental” that he opted for an M&A advisory business when the use of investment bankers became widespread, he says. Then in 2012, after a gradual rapprochement, he was able to merge with the British merchant banking arm of the Rothschild dynasties, the one started by Amschel Mayer’s son Nathan. Rothschild & Co, the Paris-listed parent group, is now worth €2.62b. (These are reminiscences):
A few years before the subprime mortgage crisis, I was told that a £4.2b lending book held by our London bank was safe but by 2007, as market funding was fast drying up, we had suffered a £300m loss. For a bank like ours, that’s sizeable. During the M&A heyday, I received an invitation from Bob Greenhill, founder of Greenhill & Co, to merge with Lehman Brothers. He insisted this would be the deal of the century and boost Rothschild’s virtually non-existent footprint in Pindostan. I said: “I’m sure it’s brilliant and you’ll find me very boring, but we want to be master of our destiny and therefore we don’t want to be diluted.” We kissed goodbye and that was it. It’s funny. The bank that would later be at the centre of the financial crisis (was Lehmann). It’s interesting to see how blind people were at the time! Once we think we’ve arrived, it’s the beginning of the end! Without being masochistic, we should always ask ourselves, what did we miss or do wrong?
How worried is he these days, I ask, given the poor state of international affairs and the threat to multilateralism?
I am more someone who sees the glass half-full, but we’ve witnessed so many things we hadn’t anticipated. There are three or four pretty colossal issues: a worrisome phase for Europe, with the migrants’ tragedy, increasing nationalistic retrenchment, a remarkable but weakened German chancellor. There’s a rather unpredictable Pindo president. And there’s an idea that I personally deeply dislike: Brexit! Now it’s hard to remain blissfully seated in one’s chair!
David spent two decades seeking a tie-up between the French and the British Rothschild houses. He cannot make sense of the UK’s decision to leave the EU.
It may sound a little stupid and romantic, but I was born during the darkest year of the war. My father was in London with de Gaulle, and the British played a role in ending Nazism, and if you look from 30,000 feet up, why dismember a European continent, where there’s so much intelligence and talent, to make it a sum of medium-sized nations? It’s running counter to history!
He puts the blame on former PM Cameron:
It’s a historical mistake to ask people ‘yes’ or ‘no’ on something even the political and business elite only partially grasps.
The recent resignations of Brexiteers Boris Johnson and David Davis gives him some hope:
Perhaps the departures of these two messieurs will enable Mrs May to carry out a soft Brexit! This would make the hard Brexiteers whine, but it would be more protective of the economy! Voilà!
Deal flow has not yet been affected, he says, but some at the bank are tempted to move to Paris after the EU picked the French capital as the new host for the European Banking Authority in a drawing of lots in November. I note that that’s another stroke of luck for Macron, referring to his unlikely ascent to the presidency last year. This makes my guest a little defensive, and he retorts:
The spheres are in alignment now, but it’s another thing to decide ahead of that time, when you think the planets will align. Emmanuel is extremely intelligent. He’s courageous. He’s doing what he said he would do.
A little over a year after his election, Macron is struggling to get rid of his image as a haughty and unempathetic president of the rich. I remark that Guy & David showed flair in poaching future presidents: Guy hired Georges Pompidou. I inquire whether Macron was really the “Mozart of finance” some have described him as being. He was promoted to partner and advised on Nestlé’s €12b acquisition of a Pfizer unit in 2012. He admits:
One cannot be the Mozart of anything after one year. But he has an ability to understand, evaluate and pick a direction, which is an inherent skill that he uses as head of state.
I tease him about his enthusiasm, but I sense it is genuine. The Rothschild link has meant fewer mandates from the state, not more, and brought other kinds of problems. During the presidential campaign, Macron was accused of being the candidate of finance. Even the pro-business Les Républicains party released a drawing of the politician with a hooked nose and top hat, tapping into 1930s conspiratorial imagery. Rothschild, who succeeded Auschwitz survivor Simone Veil as chair of the Foundation for the Memory of the Shoah, reflects:
Jews have always been scapegoats, perhaps because they are a talented minority! Islamist extremism has lately fuelled another kind of anti-Semitism! We must spend time explaining and explaining! The French are full of paradoxes! I am very French, even if I belong to an international family! I was mayor of Pont L’Evêque for 18 years! I have very deep French roots! And this nation is capable of the best! The French value success, but there’s always a sort of hostility towards other people’s money. Beneath the surface, politics remain volatile. One cannot but be slightly nervous about the prospect of having the extreme right or the extreme left at the helm of France one day….
I watch the Rothschild who rebuilt the family’s French legacy and united two branches of the dynasty cross the deserted Rue de Saint-Simon to find refuge in the shade, suddenly looking a bit frail.
Niqnaq 