Rothschild & Co. Buying Martin Maurel to Expand in France

  • Deal creates bank with 34 billion euros under management
  • Rothschild & Co should keep CET1 capital ratio at about 18%

Rothschild & Co., part of the banking dynasty focused on merger advisory, is buying Compagnie Financiere Martin Maurel to expand its wealth-management and lending operations for French families and entrepreneurs.

The boards of both companies support the deal, which needs approval from shareholders and regulators, according to a joint statement on Monday. Martin Maurel, based in Marseille, has received irrevocable backing from a majority of its investors and the merger should be completed this year, creating a private bank with 34 billion euros ($39 billion) in assets under management in France.

“This gives a better footprint across France,” said Emmanuel Dooseman, a Paris-based partner at international business-advisory firm Mazars. “It also provides more resilience in the current low-rate environment. The deeper the client base, the more room you have to sell sophisticated products and get commissions.”

Rothschild in 2012 combined its French and U.K. units under Paris Orleans SA, a French publicly-traded company controlled by the banking dynasty that made its fortune financing the Duke of Wellington’s campaign against Napoleon almost 200 years ago. Paris Orleans, run by David and Eric de Rothschild, was renamed Rothschild & Co. last year, prompting criticism from Edmond de Rothschild group, the Geneva-based asset management and private banking firm led by Ariane de Rothschild and Benjamin de Rothschild. A spokesman at Edmond de Rothschild group, which holds 7.8 percent of Rothschild & Co., declined to comment.

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Rothschild & Co. climbed as much as 7.3 percent in Paris trading, the most since August, and was up 4.4 percent at 24.32 euros as of 12:34 p.m., giving the bank a market value of about 1.7 billion euros.

The new merged entity will operate as Rothschild Martin Maurel in France and will seek to benefit from private-banking growth, especially in the Paris, Lyon and French Riviera regions, according to the statement. Rothschild & Co. should keep a core equity Tier 1 ratio under Basel III rules of about 18 percent once the deal is completed.

“We are convinced that the association of our two houses will bolster the independent family-held banking model that makes our strength,” Bernard Maurel, president and chief executive officer of Martin Maurel, said in the statement.

Martin Maurel has been in business since 1825 and has about 10 billion euros of assets under management, of which about 7 billion euros is for private banking, according to the statement. Rothschild & Co. has about 50 billion euros under management worldwide, with about half of that in France.

Under the agreement, Martin Maurel investors will receive 126 Rothschild & Co. shares for each share they own and there will also be a cash option, according to the statement. Martin Maurel is valued at 240 million euros, the companies said.

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