ZURICH Jan 22 How do you impress someone who
can afford almost anything?
Last March, about 20 wealthy guests gathered at Au Jardin Les
Amis, an award-winning French restaurant in Singapore's Botanic
Gardens to meet Baron Eric de Rothschild and representatives of
the Zurich-based private bank that bears his name.
Over a five-course dinner of smoked lobster and Wagyu
striploin steak accompanied by fine wines from Rothschild's
vineyards in Bordeaux, potential clients discussed investment
In the battle for private banking clients, the Rothschild
family brand is a powerful weapon.
"The whole thing is very personal. We want to spend time
with our clients, otherwise there's no point for us in doing
it," says Veit de Maddalena, Chief Executive of Rothschild's
private banking arm.
Under pressure over tax evasion in the United States and
Europe, Switzerland's private banks are wooing clients in Asia,
where the appetite for luxury brands is strong.
Tapping in to that culture, Rothschild's private bank
organised a series of fine dining events in Shanghai, Hong Kong,
Jakarta and Kuala Lumpur last year.
"In emerging markets, the opportunity to put a face to the
name of the family behind one of the most prestigious brands in
winemaking means something to many of the very wealthy," said
Sebastian Dovey, managing partner of London-based wealth
consultancy Scorpio Partnership.
"The Rothschilds are clearly one of the few families today
with the very rare combination of significant specialist
businesses in finance and fine wine, which they leverage."
SMALL IS BEAUTIFUL
Switzerland has been rocked by several painful and
high-profile probes since 2008, when UBS settled a
U.S. tax evasion investigation by turning over the names of
4,450 clients and embroiled a dozen of its rivals.
The country is eager to remove the taint from its financial
industry with a clean-money strategy and is at pains to play up
other strengths besides offshore accounts, including political
stability and its own currency, the Swiss franc.
"Private banking is in a phase of fundamental repositioning
and is at the same time struggling with declining income and
rising costs," Ernst & Young partner Patrick Schwaller said at a
Zurich press conference earlier this month.
"For this reason, the effect on competitive pressure is
While Credit Suisse and a host of other banks
remain mired in the tax dispute with the United States, small
private banks are focusing on their niche appeal.
In Rothschild's case, that niche is built around exclusive
access to descendants of the bank's famous founding family.
Among them are Baron Eric, who was instrumental in bringing
the Rothschild family bank back to France after some assets were
nationalised under Francois Mitterand, and Charlotte Rothschild,
a lyric soprano who specialises in oratorio such as chanson,
folk, and kakyoku, or Japanese classical Western-style songs.
"Bringing the full breadth of the family interests to a
private banking relationship appears to make a clear difference
with their network of clients and prospects," says Scorpio's
"It is difficult to tell how much of this actually helps to
translate into new business in the wealth management, but it is
unlikely to be a negative factor."
Rothschild made 19.6 million Swiss francs in full-year net
profit for the financial year ending in March 2012 and manages
assets of 18.5 billion francs compared to 1.823 trillion francs
for UBS and 803.3 billion francs for Credit Suisse.
Rothschild's de Maddalena is at pains to distance himself
from the image of a private banker as a professional bon viveur.
"We're trying to position ourselves with content, and giving
our clients the opportunity to conduct a personal dialogue with
their peers, and learn something they wouldn't elsewhere."
While winning new clients by word-of-mouth is one reason for
Rothschild to stage lavish events, another is to keep existing,
foot-loose clients happy.
"It's a huge risk," says Herbert Hensle, banking expert at
Capgemini Consulting. "Roughly two-thirds of offspring who
inherit wealth consider leaving their wealth manager."
In addition to giving clients access to their inner circle,
private banks are also enlisting academics to beef up their
Rothschild's rival Sarasin sponsors W.I.R.E., a
Swiss-based think tank on trade, industry, society and life
sciences. UBS said last year it would spend 150 million francs
to create five economics chairs at the University of Zurich.
INVESTING WITH THE ROTHSCHILDS
Rothschild is increasingly seeking to link up business
between the larger group's other arms, which include a merchant
bank and a corporate advisory.
Such cooperation is also being pursued by far larger rivals
such as Credit Suisse, but are widely seen as tough to put in
place due to potential cross-business conflicts as well as
squabbling over fees generated by cooperating.
Rothschild family members outside the bank include Bumi Plc
co-founder Nat Rothschild, who is currently battling
the coalmining group's board members and chief executive.
Within the banking group, Alexandre de Rothschild is the
most visible and is tipped to eventually take over heading the
family holding, Paris Orleans, when his father David steps down.
Rothschild's merchant bank is the vehicle through which the
wealthy can invest in private equity projects alongside the
family, an irresistible proposition for many investors.
"When you go to a family office and say 'We're opening a
private equity fund and 25 percent of the money's being put up
by the Rothschilds,' people tend to listen," Baron Eric told
Swiss newspaper Neue Zuercher Zeitung am Sonntag in December.