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Rothschild family sells stake in French arm to Bank of China

Financial newsThe Bank of China has today struck a co-operation agreement with the French arm of LCF Rothschild and taken a 20% stake in the private banking and asset management unit, in what it claims is the first strategic investment by a Chinese bank in a eurozone rival.

La Compagnie Financiere Edmond de Rothschild, part of the LCF Rothschild Group controlled by Benjamin de Rothschild, said in a statement it has signed a long-term strategic investment and business co-operation deal spanning private banking and asset management with Bank of China.

The deal will see the Chinese bank take a 20% stake in LCFR for £236.3m through the acquisition of existing and new shares that will leave Benjamin de Rothschild with a 75% stake in the business. The bank's management and staff own the remainder.

The acquisition is Bank of China's second strategic stake purchase in a European financial company following the July deal to take a 30% stake in Swiss buyside group Heritage Fund Management, according to research company Dealogic. It is just the ninth acquisition of a stake in a European financial or insurance company by any Chinese group.

De Rothschild, chairman of LCFR's supervisory board, said the deal "opens up a new era of development for the company in the tradition of innovation and international expansion of our group".

The two companies said their co-operation will span asset management, where they will "leverage each others' strengths for the development and distribution of investment products in China and France" in areas such as products for qualified domestic and foreign institutional investors.

They will also work on asset management opportunities outside China and France, and on potential joint investments in private equity around the world.

They will also work together on the private banking front, strengthening Bank of China's domestic business, and taking advantage of LCFR's ability to handle high-net-worth individuals' assets and its expertise in investment strategy and advisory work for family-controlled small businesses.

Xiao Gang, Bank of China's chairman, said the partnership "forms part of Bank of China's global development strategy. We expect to further strengthen our asset management operations and product design capabilities in private banking business, and widen the product and service offerings to our clients".

Bank of China said it has been "selectively seeking long-term strategic partnership opportunities with offshore industry leaders" to strengthen its capabilities and grow its global presence. LCFR had nearly £30bn of assets under management at the end of last year, and employed more than 800 staff.

Bank of China's international arm worked with Morgan Stanley to provide financial advice to the Chinese bank on the deal, while Goldman Sachs and SG Corporate & Investment Banking advised LCFR.

Source: Wealth-Bulletin
Date: 19.09.2008 [191]

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