The venerable banking dynasty and former Barclays boss are tapping into what they see as opportunities in Europe's brokerage sector amid regulatory change.
Former Barclays chief executive Bob Diamond has teamed up with the Edmond de Rothschild group to become the largest shareholder in financial services group Kepler Cheuvreux, hoping that the firm will gain from recent regulatory disruption.
Diamond is a co-founder of Atlas Merchant Capital, the business he set up with David Schamis.
“Kepler Cheuvreux welcomes new prestigious shareholders who are investing in the firm’s long-term development and who are perfectly aligned with the firm’s strategic vision. The new shareholders are Atlas Merchant Capital with 19.7 per cent and ERES (Edmond de Rothschild Equity Strategies) with 8 per cent of the share capital. BlackFin Capital Partners and their co-investors have disposed of their shareholding,” the firm said.
The brokerage and banking industry is being shaken up by the sweeping European Union changes that came into force at the start of this year – MiFID II. The rules force firms to unbundle fees for analyst research and provide far more information to clients to avoid potential mis-selling episodes. The measures, designed to protect investors, have also added costs and involved heavy IT spending. Even firms outside the EU that interact with the bloc are affected by the changes, as is the case with the GDPR data protection rules that the EU introduced in May.
A report by the Financial Times quoted Diamond as saying: “The opportunity for banks to outsource [their equity trading and research] and partner with Kepler is very attractive for them. We think this model is perfect for the Mifid II environment.”
Kepler works with five partner banks: UniCredit, Crédit Agricole CIB, Rabobank, Swedbank and Belfius.
The FT report noted that a co-founder of Kepler, Laurent Quirin, was last year revealed by the Paradise Papers' leak of offshore accounts to have earned more than €7 million ($8.13 million) between 2009 and 2014 from Boca Management, a Malta-based company he owns.
Quirin stepped down as chief executive last week, the newspaper said, and became chairman of the company as part of a wider management shake-up. That followed a €900,000 fine by France’s regulator for weak controls, including a failure to separate analysts and traders, the report said.
A spokesman for Quirin, who is domiciled in Switzerland, reportedly denied that the management changes were linked to the fine or the leaks about his Malta company, which he said was “legal, fully disclosed and fully in line with the operations of Kepler Cheuvreux”.
Earlier in June, the firm announced four new appointments: Guillaume Cadiou general group manager, Emmanuel Le Coz chief digital officer, Julia Aliche group head of risk, control and compliance, and Frédéric Jamin group performance manager.
Diamond has been a controversial figure. Associated with the very aggressive investment banking world prior to the 2008 financial crash, he resigned from Barclays when the bank became engulfed in the interbank interest rate-rigging scandal that saw a number of lenders fined and punished by regulators worldwide.