The Rise and Evolution of the Rothschild Banking Empire

Explore the rich history of the Rothschild family, from their humble beginnings in the Frankfurt ghetto to becoming the world's largest bank. Discover their involvement in pivotal moments and their impact on art, finance, and philanthropy.

The Rise and Evolution of the Rothschild Banking Empire
The coat of arms of the Rothschild family of 1822 was granted to the Barons Rothschild in 1822 by Emperor Franz I of Austria. Image: Wikipedia

Rothschild Bank's executive chairman, Alexandre Guy Francesco de Rothschild, is opening a series of regional branches in the US, with Memphis being next in line. The location was chosen for its strong commercial prospects, including being the FedEx global hub and the world's second-busiest cargo airport in 2021, as well as Tennessee's low tax rates.

Alexandre, who succeeded his father, Baron David de Rothschild, has overseen one of the many restructurings in the 215-year history of the family firm. He recently announced that the firm would go private after being listed on the Paris stock exchange for nearly 40 years. According to Alexandre, being a private company better aligns with the DNA of the company and its potential.

The public listing was never part of the original plan and became a growing burden for the family. It was established in the 1980s as a way to relaunch the family's French operation after it was nationalized by President François Mitterrand. Even though the listing did what it was supposed to do at first, Alexandre wanted to get rid of it sooner, but the pandemic got in the way.

Rothschild employs around 3,800 people in over 40 countries and has a diverse range of businesses, including advisory work for clients, wealth and asset management, and a merchant bank. The advisory division, which makes up 60% of the company's income and includes mergers and acquisitions, is the most profitable in Europe and the fifth most profitable in the world.

Rothschild is a successful boutique investment bank that recently advised the Glazer family in the battle for control of Manchester United. A Rothschild managing partner, Robert Leitão, is also a director of the football club.

The Legacy of the Rothschild Dynasty

The Rothschild dynasty traces its roots back to Mayer Amschel Rothschild, who began lending money in Frankfurt's ghetto in the 1760s. His five sons then spread out across Europe, with Nathan establishing a branch in Manchester in 1799 and later founding the London bank, NM Rothschild, in 1808. In 1809, Nathan built New Court in St. Swithin's Lane in the City of London, which served as the headquarters of the bank and remains there today.

Throughout the 19th century, Rothschild's London office was a major player in bullion and foreign exchange. The bank won the contract to supply gold coins for Wellington's troops during the Battle of Waterloo in 1814 and 1815, leading to a surge in international business. Rothschild helped pay for the railways in Europe, helped Brazil break away from Portugal, and made it easier for the British government to buy the Suez Canal.

Rothschild also became one of the world's largest banks, advising on the launches of Rio Tinto and De Beers. The family was known for their love of wine and horse racing and invested in vineyards, including Château Mouton Rothschild, starting in 1853. They were also known for their extravagant palaces, art collections, and philanthropic initiatives, such as building hospitals, schools, social housing, and libraries.

In the late 20th century, family divisions emerged, including a disagreement between Jacob Rothschild and Sir Evelyn de Rothschild over the chairmanship of the London branch. In 2003, Sir Evelyn brought the French and British branches together to form Rothschild & Co., and in 2012, a formal merger was completed.

However, the Swiss-based wealth manager, Edmond de Rothschild, run by Ariane de Rothschild, remains separate from the main group and has a different ownership structure. Even though Alexandre de Rothschild is trying to bring the Swiss branch into the family, insiders think it will be hard because family members have different ideas.