M and A

Rothschild To Spin Off Trust Business

Jackie Bennion, 26 October 2018

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The decision will allow the bank to redouble on core areas. The move continues a pattern of M&A in the trusts sector.

Rothschild & Co is preparing an agreement to carve off its worldwide wealth planning and trust services business as part of a strategic re-alignment, the family-owned bank has announced.

Richard Martin, a senior executive of Rothschild & Co, will lead the acquisition which will be financially backed by an "experienced investor", the firm said in a statement this week. Martin oversees the trust business and will be supported by senior management at Rothschild Trust.

The acquisition fits in with the company’s longer-term plan to focus on its core wealth management and private banking business, and is expected to complete in Q1 2019, subject to regulatory approval.

The bank’s wealth management arm provides investment management services to a wide range of families, entrepreneurs, charities and foundations with more than $69 billion in assets managed across the group.

Alexandre de Rothschild, the company’s executive chair, said the environment is changing and, in reviewing its private wealth offering, they have decided that the trust business would be operated more successfully as an independent structure. The spin-off will be purchased and managed by Martin, a longstanding Rothschild employee, which will “ensure continuity”, Rothschild said.

The trust business will be rebranded next month as part of the completion. 

Martin said that his team will continue to work closely with Rothschild & Co, “providing a seamless service” to existing clients and their “intermediary community”.

The development is part of a broader story of financial firms, such as those in the funds, trusts and corporate advisory space, reinventing themselves under new names or adopting new tags following M&A deals. A number of banks, such as Investec, ABN AMRO and Barclays have spun off trusts and associated businesses. ZEDRA, for example, bought the Barclays UK trusts business and completed that deal in April last year. In December 2017 investor services firm SGG Group bought Jersey-based First Names Group from AnaCap Financial Services, the private equity organisation.

Among other deals, in 2014, Butterfield Group, part of Bermuda-based Butterfield, completed its acquisition of Guernsey-based Legis Group, taking on its trusts and corporate services business. Salamanca, the UK-based Investec Trust Group; ABN AMRO sold its trusts business a decade ago to Equity Trust. Rival Netherlands-based ING spun off its trusts business in 2007. In the Channel Islands, deals have included investment by Close Brothers Private Equity in Jersey Trust Company and Kleinwort Benson’s acquisition of Close Brothers Offshore Group. In 2011, TMF and Equity Trust merged. Australia and New Zealand Banking Group has completed the sale of its ANZ Trustees business to Equity Trustees.

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