Bank of China struck a deal with the historic Rothschild banking family on Thursday to buy a stake in La Compagnie Financiere Edmond de Rothschild, further highlighting China’s financial power.
Bank of China is paying 2.3 billion yuan ($336.5 million) for a 20% stake in the firm, which is a private banking and asset management business of the Rothschild family. Benjamin de Rothschild will hold 75% of the business. The transaction is the latest sign of the growing financial power of China and other emerging economies. Banks in China, Singapore and Dubai have bought holdings in companies such as Morgan Stanley, Barclays and Citigroup.
China Development Bank, the lender for Chinese policy initiatives, bought a 3.1% stake in British bank Barclays last year. The deal, which requires regulatory approval, will help LCF Edmond de Rothschild expand overseas and the two sides said they would focus on private banking and asset management businesses in China, France and other strategically important regions. According to the company’s website, LCF Edmond de Rothschild made a net profit of €105 million in 2007.
The Rothschild banking dynasty began when Mayer Amschel Rothschild started a business in Frankfurt in the late 18th century. His sons set up Rothschild banks throughout Europe in cities including Paris, Vienna, Naples and London. They financed the Duke of Wellington’s victory over Napoleon at Waterloo and the British move for financial control of the Suez Canal. The Rothschild international banking group is one of the few European merchant banks to have remained independent in the face of sector consolidation. (Reuters)