With luck, 2014 will be the year when European M&A warms up. It will also be the year when IPOs are resurgent, when hiring makes a comeback and when bonuses in London begin to be properly constrained by the European Union’s bonus cap.
In the circumstances, you may be wondering where best to position yourself. In the circumstances, you could probably do worse than working for NM Rothschild, which has recently created an all-new Goldman-style partnership group for its 48 most senior bankers.
Sounds tempting? This is Rothschild’s allure, distilled into six easily-digestible points.
1. It pays reasonably well
Rothschild pays ok. It doesn’t pay as well as Goldman Sachs, Citi and JPMorgan, all of which pay their code staff stupidly well, but nor does it pay terribly either.
NM Rothschild’s generosity is outlined in its most recent Pillar 3 remuneration disclosure for the year ending March 2013. It reveals that it employs only 31 code staff (governed by European Union remuneration rules in London), who received £6.3m in salaries and £13m in bonuses. This works out at an average of £622k in total compensation per head.
The downside: In 2012 Goldman Sachs paid its average member of code staff £2.9m (per head.) The highest paid director at Rothschild in London earned £1.3m in 2013.
2. If you’re not a partner, Rothschild pays a lot of cash
Equity partners at Rothschild are a new phenomenon and have been around for only the past six months or so (they receive shares in the parent company Paris Orléans, which is listed in France).
The most recent annual report for NM Rothschild in London, for the year ending March 2013, suggests that most London bankers at NM Rothschild don’t get paid equity in the parent company but are compensated entirely in cash and deferred cash. Deferred cash is paid in the second and third years it’s been awarded as a bonus.
The downside: You don’t get the cash immediately. Cash can’t appreciate. Rothschild will withhold the cash if you leave.
3. If you’re a partner at Rothschild, you get equity and a say in the running of the bank
If you’re one of Rothschild’s 48 new equity partners, you’ll (supposedly) have a real say over the way the firm is run. “As much as anything else this is a management group – it’s a way of bringing people from across the business together to work for the future of the business,” says a spokesman for the bank.
The downside: This only applies to partners. All other staff have to make do with the, ‘staff consultative committee.’
4. If you work for Rothschild, you won’t usually be made redundant
In the past, Rothschild had a reputation for being nice and supportive and not making too many people redundant. “A lot of people here have very long tenure,” one of its senior employees tells us. This is confirmed by the Financial Conduct Authority Register, which shows that nearly 30% of the registered staff at Rothschild have been at the bank for a decade or more.
The downside: Despite generally not making redundancies, Rothschild had a big clear-out in 2010 when it dumped a lot of directors. Its appetite for layoffs appears to have persisted – between March 2012 and March 2013, the company cut 46 people from a total of 681.
5. Once you’re a senior banker at Rothschild, you will find it easy to ‘go plural’
The fantasy of any senior M&A banker is usually to wind down gradually and take on a lot of non-executive directorships. This is particularly possible at Rothschild according to the senior employee we spoke to, who said plurality is fairly standard among senior bankers there and people are encouraged to ease themselves out slowly. A quick look at the current whereabouts of past Rothschild bankers like Timothy Hancock reveals that many are indeed happily ensconced as NEDs at listed firms. One Rothschild banker, Oliver Letwin, was famously paid £60k a year for eight hours’ work a week whilst he combined his job with his position as an MP.
The downside: This only applies to senior staff. Junior Rothschild bankers have to work as hard as bankers elsewhere.
6. Rothschild is well-positioned to benefit from an uptick in European investment banking revenues
Finally, Rothschild looks handily positioned from a year in which investment banking revenues are expected to increase and sales and trading revenues are expected to fall or flatline. It doesn’t have a sales and trading business and 9th for European M&A last year according to data provider Dealogic.
The downside: The M&A revival may never happen.