Rothschild has become the first major victim of volatile market conditions, putting its retail and institutional asset management arms up for sale to concentrate on its private banking business.
RAM chief executive Paul Manduca admitted this week that market conditions have sapped income flows and it has decided to seek a takeover or alliance with a more sizable asset management company.
Manduca, who does not expect to have a role in a merged company, claims interest has been expressed by several fund managers but denies negotiations have started, saying no deals will be struck until all options are explored.
Potential buyers could include Aberdeen Asset Management, Credit Suisse, LeggMason and New Star. All could be tempted by the well regarded multi-manager service although IFAs believe that despite having £13bn under management overall, its Five Arrows retail funds suffer from lack of size.
The news came as the Rothschild group appointed a new chief executive – ex-Schroders Private Banking joint chief executive Mike Bussey. His job is to create an integrated worldwide private banking and wealth management operation.
Manduca says: “With markets like this, retail flows will not be as hoped and it will be a long time before retail investors get back in. You need to be a bigger business these days. There has been a lot of interest in a takeover but it is too early to say what we plan to do.”
Chelsea Financial Services managing director Darius McDermott says: “Companies are finding it hard to make money. I would not be surprised if we saw much more of this until the economic cycle changes.”