"It's time to stop shilly-shallying around. We should be proud to be bankers!"
"It's been almost a year since Ariane de Rothschild took over as Chairwoman at the Swiss group Edmond de Rothschild, which has brought in 8 million Swiss francs this year. She looks back on the last 11 months spent focusing on restructuring the Group"
Media: Les Echos
Journalists: Edouard Lederer, Guillaume Maujean et Ninon Renaud
Dated: December 22nd, 2015
Find below a translation of the interview.
Ariane de Rothschild: "We should be proud to be bankers."
The Group boasts the largest net inflow in its history.
BANKING Almost a year ago Ariane de Rothschild took over at the Edmond de Rothschild Group, which will bring in a record 8 million Swiss francs for private banking and asset management this year. The Group's Chairwoman talks about the dispute with her cousins in France at the Rothschild & Co Group.
"It's time to stop shilly-shallying around. We should be proud to be bankers!"
It's been almost a year since Ariane de Rothschild took over as Chairwoman at the Swiss group Edmond de Rothschild. She looks back on the last 11 months spent focusing on restructuring the Group and marked by the highly publicised tug of war launched against her cousin David over the use of the Rothschild brand.
It has been almost a year since you took over at the Edmond de Rothschild Group: how has it gone so far?
It's been a very interesting year! Previously I had the opportunity to be a member of the board of directors, and I am a shareholder. The way these different points of view intersect is interesting because it goes to the heart of governance matters and issues of individual duties and rights, which are very important to me. These issues were central to the 2008 financial crisis.
Of the three roles – shareholder, director and head of operations – which do you prefer?
My current position as Chairwoman of the Executive Committee. It's the most challenging but also the most rewarding. I have significant responsibilities when it comes to our teams, and I'm the one who sets the pace. I represent the Group and the family's commitment vis-à-vis our employees. This standing enables me to bring new energy to the bank. A board member has the luxury of not needing to delve into certain operational matters, such as the structure of the bank's IT system. I'm not naturally inclined toward that sort of thing but it has fallen to me and now I have become quite competent in this area. Working in close collaboration with the teams in charge, I am the one who will oversee this project within the Group.
The Group was shaken when several bankers left, however...
For eight years now, the banking industry has been shaken, sometimes profoundly so, by the considerable changes it has had to navigate. The lifting of banking secrecy in Switzerland marks a true paradigm shift for the sector. Swiss private banking institutions can point to real advantages and skills that take a long time to develop, but some of them were slower than others when it came to finding ways to boost competitiveness in a market that is suddenly opening up to competition. I always tell my teams: "if you aren't looking to conquer the world each morning, don't bother showing up!" Obviously, it wasn't easy for the financial industry to see itself vilified during the three years of the crisis. But it's time to stop shilly-shallying around. We should be proud to be bankers!
How do you respond to the criticism that has been levelled against you since you took over at the Edmond de Rothschild Group?
By saying that this year we will bring in over 8 million Swiss francs for private banking and asset management combined, the largest net inflow in the Group's history. All our geographic areas contributed to this result. Our private banking business in France, the largest platform for independent private management in the country, will bring in €750 million this year, compared with €600 million in 2014. Our total assets have also reached a historic peak and turnover in our teams is only 6 or 7%. These figures speak for themselves.
Where do you think the criticism is coming from?
Change really scares people. People love icons that never change and they don't understand that these icons cannot last unless they are regularly dusted off and embodied. The reason the Rothschild brand has been able to last for seven generations is that the family has always known how to anticipate risks and when to take them.
Is not being born with the Rothschild name an advantage or a handicap?
It's an opportunity! I focus on results and clients. I worked as a trader when I was younger. That taught me that my legitimacy depends on being able to deliver results. Our profession needs to be constantly reinvented and my duty is to help my teams rethink it.
Tax evasion: an agreement with the United States for $45 million
The United States Department of Justice announced that Edmond de Rothschild (Switzerland) SA and its subsidiary Edmond de Rothschild (Lugano) were to pay a $45.2 million fine. This agreement was made within the scope of the programme to promote cooperation with Swiss banks that "have reasons to believe" that they may have breached US tax law. A total of 68 banks have made up for the past and paid fines worth $802 million to date.
Is the Group's restructuring now complete?
The foundations are complete. This year we reorganised our international private banking business by assessing our teams and business models so that we could strengthen certain teams and put an end to some of our smaller, less strategic business lines such as brokerage in the UK. We worked on the effects of regulatory changes such as MiFID II and the automatic exchange of information. Most importantly, we conducted a thorough analysis of our operating model for private banking and, beginning early next year, we will shift our entire IT system over to more powerful platforms. We invested nearly 70 million Swiss francs in this highly strategic Group project. The goal is to offer our bankers more flexibility. This important project will be the backbone of Group convergence, further strengthening it.
You have brought more young people and women on board. Is this part of a deliberate strategy on your part?
This is not a feminist crusade on my part. We comply with gender balance within all our entities and the countries where we operate, up to and including the Executive Committee. These days there are many women in finance who have really interesting outlooks, with long-term vision and principles that match up with what I wish to promote. They fit with the DNA of our Group as well. But we shouldn't stop at this kind of parity; we should be hiring more internationally and bringing in people with diverse backgrounds.
Would you say that you and your husband [Benjamin de Rothschild] work as a team to lead the group?
As the Chairwoman of the Executive Committee, I'm involved in all operational matters. As Group CEO, my husband is not called upon to go into that level of detail. I think this division of labour helps ensure the proper governance of the company. Naturally, we talk about everything at home, but that's separate from our work.
"My daughters won't get a single dividend if they don't know what we're talking about."
Are you preparing your four daughters to take over?
At the moment, it's happening informally. We talk a lot about the business world at home, and I suppose that a taste for these sorts of things runs in a family. What's more, I have warned them that they won't get a single dividend if they don't know what we're talking about. They'll need to understand and study finance. As to working at the bank, they'd have to express an interest. They still have plenty of time, though. I tell them to enjoy what life has to offer first. It's true, though, that when you're constantly immersed in the business world, it's hard to give it up!
A lawsuit is underway against your cousins in France at the Rothschild & Co Group for their use of the Rothschild brand. How did your family react?
Family opinion didn't have anything to do with my decision in this case. The suit is about business law, not a family dispute. I find the use of "Rothschild & Co" and "Rothschild Group" harmful because it creates confusion between the names of our two groups. This constitutes a break with the traditions and "gentlemen's agreements" that govern the family. We know that these days our clients go straight to search engines when they want information. For them to be well informed, it's important to have clear distinctions between the companies. This is not about a family dispute, but rather about unfair competition.
Is mediation still a possibility for this case?
For my part, I haven't changed my mind. The suit is still on-going.
Do you still intend to hold positions on the board of directors at Rothschild & Co, your cousin's holding company?
Our two groups are linked by cross-holding agreements. As such, we hold 10% of the voting rights in Rothschild & Co. Considering this level – and what is required in terms of responsible business practices – I think it would be impractical not to maintain a presence on the board. We will see in the coming year what we can do prior to the General Shareholder's Meeting.
The United States Department of Justice launched a programme to promote cooperation with Swiss banks in order to resolve cases of tax evasion. Where are you with regard to these negotiations?
This case, which covered past issues, was closed several days ago. Having taken this situation seriously and proceeded with caution, we set aside provisions and were able to pay the required amounts without negatively impacting the Group's bottom line.
On the heels of Mark Zuckerberg's recent announcement, would you be willing to follow his lead and donate 99% of your shares?
Since the earliest days, our family has always been charitable. Making money confers a responsibility, and refusing to give back would be out of the question. That being said, people have different ideas about philanthropy: in the United States we tend to see large one-off donations like Warren Buffet's "Giving Pledge", whereas I give consistently over time. In the end, the outcome is the same, though I think that long-term, consistent donations are more challenging. To me, philanthropy is an integral part of doing business. It is a way to have a lasting impact beyond merely generating profits. Unfortunately, it seems that not enough business leaders are aware of this, since the quantitative culture is still king.