Best known for its presence in Europe, Paris-based Rothschild & Co. has heightened its focus on the U.S. market and is adding M&A bankers on both coasts. While the firm is hiring junior and senior bankers, it appears particularly thirsty for managing director-level talent – and is willing to pay for it.
Reporting its first-half results on Tuesday, Rothschild says it plans to double its M&A market share in North America by 2020. The bank has added 26 MDs within the U.S. M&A group since 2013, but eight of those hires were made just this year, with three joining in July alone. "Our system, of 160 active bankers on both the East Coast and the West Coast of the United States, is gradually strengthening, with the annual recruitment of five to ten managing directors in M&A," Olivier Pécoux, president of the bank's global financial advisory activities, told France's Les Echos.
Two of the most recent hires came from UBS; Mike Ostow is now running Rothschild's financial institutions group out of New York, while Chicago-based Jonathan Herbst was named the head of its technology, media and telecom team. Both were longtime MDs with similar titles at UBS, so they likely didn’t come cheap.
Staff costs across the bank were up 17% globally during the first half, despite just a 12% increase in revenue. Rothschild attributed both upticks to its advisory group, though it didn’t break down specifics for each region. However, the bank made it clear that a large chunk of the compensation pool is being directed toward new MDs in the U.S. Rothschild's compensation ratio was 62.2% in the first half, but the bank went out of its way to note that number would fall to 61.1% after adjusting for senior M&A hires in the U.S. That may not sound like a big difference, but when you are talking about over $1 billion in revenue and less than 10 hires across six months, it is.
A comp-to-revenue ratio of 62% compares favorably to boutiques like Evercore (60%) rather than large full-service banks, where the ratio tends to land in the low-to-mid 40s. Pay-per-head during the first-half was just under $200k – and that’s including back office and administrative staff (and possibly butlers, at least in London).
While MD hires make all the headlines, Rothschild is adding plenty of juniors in the U.S. as well, according to Jimmy Neissa, the bank’s head of North American operations. He told us back in March that they bring on around 30 recent college graduates in the U.S. every year, though he expects that number to grow going forward. The bank posted seven analyst and associate positions on its internal job site within the past week. Unlike other banks, Rothschild doesn’t target MBAs, so analysts tend to grow into associates.
Similar to what it is doing with MDs, Rothschild appears to pay analysts near the top of the market, providing good reason for the bank’s notoriously low attrition rate. According to Wall Street Oasis, Rothchild analysts in New York can expect a base salary of around $85k plus a bonus of as much as $60k.
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