David de Rothschild, 2017.
David de Rothschild, 2017.
Image: Getty Images / Vincent Isore / IP3

Perhaps it is the Spanish serenade in the background. Or the late summer heat leaving us a bit drowsy despite the afternoon breeze. But here we are — David de Rothschild and I, sipping our second espressos and pondering François Hollande’s romantic exploits.

“I don’t know if he is a good lover but he appeals to women,” my 75-year-old guest says of the former president who was caught sneaking out of the Elysée Palace on a scooter to see his mistress. “To some women,” I feel the urge to say.

For a second I wonder how Hollande’s love life fits in with our conversation — the first time the French Rothschild patriarch has truly let his guard down after an hour and a half of lively but careful discussion. Hollande is to serve as a counterpoint to his successor Emmanuel Macron — a Rothschild alumnus. Macron’s former employer is keen to emphasise the 40-year-old president’s qualities after I pointed out his high-handed governing style and declining approval ratings. In liberal circles abroad, Macron is still treated as a rock star, but at home his monarchic image is starting to grate.

Hollande “is very smart, he is a man of culture, he is pleasant. But essentially, why is he out? Because he couldn’t decide, because he always hesitated. He lost credibility abroad and came to the conclusion... that he shouldn’t run again. It’s extraordinary,” Rothschild says. “I prefer a decisive Macron, whose best interest is to succeed. Because what does a man his age want? Not the honours now and failure tomorrow.” I tease Rothschild that Macron must have performed his charm trick on him.

Macron, who spent a little over three years at the Franco-British investment bank before entering politics, has had a good master in this regard. When I arrive early at L’Affable, one of Paris’s new crop of chic bistros off boulevard Saint-Germain, Rothschild is seated by the window, wearing the smart banker’s uniform of light grey suit, pastel blue shirt and navy tie. He waves and stands to greet me, his broad smile the perfect embodiment of the restaurant’s name.

The place is buzzing at this hour, when lunchers at small wooden tables forgo intimacy to join the happy hubbub. Like most hip Parisian bistros, it has not invested in air-conditioning, which forces my guest to make use of his white pocket square to wipe his brow. The Rothschilds, who live nearby in a smart neighbourhood frequented by ministerial staffers and Sciences Po students, are occasional clients. “I wanted to add a personal touch,” he says. We are promptly advised on the highlights. We choose sea bass carpaccios as starters, followed by lamb and avocado for Rothschild and red drum-fish curry for me.

We first had lunch more than a decade ago in the formal setting of the bank during the mergers and acquisitions (M&A) boom that preceded the financial crisis. I remember a charismatic figure who let other bankers do the bragging. We meet again a few weeks after he handed over the reins of the family bank to his son Alexandre, a former private equity analyst displaying the same understated elegance.

Succession is a momentous event in the life of a Rothschild, a dynasty started in the Frankfurt Jewish ghetto in the 18th century. Of the five branches started by Mayer Amschel’s sons in the UK and across the continent, the Paris and London banks are testament to the family’s position in Europe’s history — from lenders to warmongering states in the 19th century to modern financiers, fine-wine makers and members of the jet set. But Rothschild senior insists there was no “passing of the flame ceremony”. He portrays it as the outcome of a 10-year grooming, in which Alexandre proved his worth starting the bank’s private equity fund management business and recently helping to settle a dispute with Swiss relatives over the use of the Rothschild name.

In every successful venture, there’s a little bit of ‘spot on’ and a lot of luck.
David de Rothschild

He later admits to his joy when his son suggested “the time had come” to join the bank. He enjoys keeping an eye on the business, while not having to deal with the day-to-day issues. Our glasses of Saumur-Champigny arrive. We say “cheers” to that.

The sea bass starters appear shortly after, translucent on stone plates and sprinkled with pickled radishes and basil. “We’re not going to gain 5kg with that,” he chuckles.

When he took over from his father Guy, 39 years ago, there was no such smooth transition — only chaos. In 1982, the bank was nationalised by socialist president François Mitterrand. The French Rothschilds were financially compensated but lost their banking licence and the right to use their name, hence their raison d’être. Behind his spectacles, Rothschild's eyes blink faster as he tells of employees in tears, the “forced holidays”, and finding himself going to the movies on the Champs-Elysées on Wednesday afternoons.

This was the second time in barely four decades that the business had been all but destroyed. In the late 1930s, his German mother sought refuge in New York, via Buenos Aires, fleeing the Nazis. He was born in 1942 in the Big Apple and became the first newborn registered as “Free French” at the consulate, he says with pride. His father, who, during the war had joined the resistance in London against the collaborationist government of Marshal Pétain, threw in the towel. “Jews under Pétain, pariahs under Mitterrand, enough for me,” he wrote in Le Monde. “Rebuilding from the rubble twice in one life is too much.”

With a few associates and loyal clients, Rothschild set off to start all over again. “My situation was very different from any other Rothschild because there was nothing left and everything had to be built. At the age of 40, I was starting my life. I felt no pressure or anxiety about succeeding my father. I was viewed as an entrepreneur, the creator not the heir, which is easier to bear. It means you own your successes and failures. Alexandre is taking over a well-functioning machine of a certain size.”

He reveals that his lawyer friend Robert Badinter, Mitterrand’s justice minister and anti-death penalty champion, was instrumental in getting a banking licence back in 1984 (the name followed two years later, when centre-right prime minister Jacques Chirac privatised the bank). “He told Mitterrand: ‘You cannot strip the Rothschild family of their trade and their life in France'. ” The socialist leader acquiesced.

Early on, Rothschild had the intuition that success would depend more on his ability to attract talent than on his banking skills. “I never sought to compete with the investment bankers, whose sophistication and technical skills were far greater than mine. It’s no false modesty, it’s just being realistic. My main problem was to pick people with the best qualities, but ones who would not keep their cards to their chests.”

In the wake of France’s World Cup victory, he compares himself to Didier Deschamps, Les Bleus’ coach, who favoured “team spirit over egos”.

David de Rothschild’s overarching obsession was to “preserve the family ownership”, and this meant shunning lending activities, which would have required external capital and diluting the family shareholding. It was only “coincidental” that he opted for an M&A advisory business when the use of investment bankers became widespread, he says. Then in 2012, after a gradual rapprochement, he was able to merge with the British merchant banking arm of the Rothschild dynasties — the one started by Amschel Mayer’s son, Nathan. Rothschild & Co, the Paris-listed parent group, is now worth €2.62bn. “In every successful venture, there’s a little bit of ‘spot on’ and a lot of luck,” he smiles.

“The path has not all been linear,” he confides. A few years before the sub-prime mortgage crisis, he was told that a £4.2bn lending book held by the London bank was safe. But one morning in 2007, as market funding was fast drying up, he received a call that marked the start of five “difficult years” (an understatement). The bank suffered a £300m loss. “For a bank like ours, it’s sizeable,” he says.

Our main courses dissipate these grim reminiscences. My fish, lightly cooked and with a crunchy skin, lies in a bright green coconut soup, enlivened by peanuts and lemongrass. My guest seems similarly impressed by his meal — slices of roasted lamb circled by dark green dots of avocado purée. “It’s beautiful, magnifique!” he exclaims. Unexpected mashed potatoes are met with more exclamations and an offer to share, which I do not dare accept.

There was another phone call that Rothschild received during the M&A heyday, from Bob Greenhill, founder of the US investment bank Greenhill & Co: “ ‘I’ve got something fantastic for you, can I come and see you? I will come with a friend.’ ” The friend was Dick Fuld and the fantastic thing a plan to merge with Lehman Brothers. Over dinner and a bottle of Château Lafite at Rothschild’s Parisian house, the two Americans insisted this would be the “deal of the century” and boost Rothschild’s virtually non-existent footprint in the US.

“I said: ‘I’m sure it’s brilliant, you’ll find me very boring, but we want to be master of our destiny and therefore we don’t want to be diluted,’ ” he recounts. “We kissed goodbye and that was it. It’s funny, the bank that would later be at the centre of the financial crisis... It’s interesting to see how blind people were at the time... Once we think we’ve arrived, it’s the beginning of the end. Without being masochistic, we should always ask ourselves, what did we miss or do wrong?”

How worried is he these days, I ask, given the poor state of international affairs and the threat to multilateralism? “I am more someone who sees the glass half-full, but we’ve witnessed so many things we hadn’t anticipated... There are three or four pretty colossal issues — a worrisome phase for Europe, with the migrants’ tragedy, increasing nationalistic retrenchment, a remarkable but weakened German chancellor. There’s a rather unpredictable US president. And there’s an idea that I personally deeply dislike — Brexit. Now it’s hard to remain blissfully seated in a chair.”

Again, our zealous waiter cheers us up by inquiring about our meal. We have wiped our plates clean and the mashed potatoes are no more. “Nothing will stop us from coming back,” Rothschild declares with a laugh. “As a matter of fact, we’re going to look at the dessert menu.” Turning towards me, he apologises for such boldness: “That’s very impolite, I should have asked you first.” But I am all in for dessert in general — and the basil sorbet vacherin in particular. “I am vacherining with Madame, too,” Rothschild enthuses.

I inquire whether Macron really was the “Mozart of finance” some have described. “One cannot be the Mozart of anything after one year,” he says

Rothschild, who spent two decades seeking a tie-up between the French and the British Rothschild houses, cannot make sense of the UK’s decision to leave the EU. “It may sound a little stupid and romantic, but I was born during the darkest year of the war, my father was in London with de Gaulle and the British played a role in ending Nazism. And if you look from 30,000 feet high, why dismember a European continent where there’s so much intelligence and talent to make it a sum of medium-sized nations? It’s running counter to history.” He puts the blame on former UK prime minister David Cameron: “It’s a historical mistake to ask people ‘yes’ or ‘no’ on something even the political and business elite only partially grasps.”

The recent resignations of Brexiters Boris Johnson and David Davis give him some hope: “Perhaps the departures of these two messieurs will enable Mrs May to carry out a soft Brexit. This would make hard Brexiters whine, but it would be more protective of the economy. Voilà.”

Deal flow has not yet been affected, he says, but some at the bank are tempted to move to Paris after the EU picked the French capital as the new host for the European Banking Association in a drawing of lots in November. Another stroke of luck for Macron, I note, referring to the politician’s unlikely ascent to the presidency last year. This makes my guest a little defensive: “Planets have aligned, but it’s another thing to decide to go for it when you think planets will align,” he retorts before singing Macron’s praises (“extremely intelligent”, “courageous”, “doing what he said he would do”).

A little over a year after his election, the pro-business leader is struggling to get rid of his image as a haughty and unempathetic “president of the rich”. My attention drifts to the basil and lime sorbet in the delicate white meringue shell, topped by whipped cream and strawberries — a treat for the eyes and taste buds. As our espressos arrive, I remark that his father and he showed flair in poaching future presidents (Guy hired Georges Pompidou). I suggest it is down to Alexandre to pick a female leader. “Yes, why not! You?” he teases. I am past 40, it’s probably too late by Macronist standards, I say.

I inquire whether Macron really was the “Mozart of finance” some have described. He was promoted as a partner and advised on Nestlé’s €12bn acquisition of a Pfizer unit in 2012. “One cannot be the Mozart of anything after one year,” he admits. “But he has an ability to understand, evaluate and pick a direction, which is an inherent skill that he uses as head of state.” I tease him about his enthusiasm, but I sense it is genuine. The Rothschild link has meant fewer mandates from the state, not more, and brought other kinds of problems.

During the presidential campaign, Macron was accused of being the “candidate of finance”. Even the pro-business Les Républicains party released a drawing of the politician with a hooked nose and top hat, tapping into 1930s conspiratorial imagery. “Jews have always been scapegoats... perhaps because they are a talented minority,” Rothschild, who succeeded Auschwitz survivor Simone Veil as chair of the Foundation for the Memory of the Shoah, reflects. Islamist extremism has lately fueled another kind of anti-Semitism. “We must spend time explaining and explaining.”

The French are full of paradoxes, he says. “I am very French even if I belong to an international family, I was mayor of Pont L’Evêque for 18 years, I have very deep French roots — and this nation is capable of the best, the French value success, but there’s always a sort of hostility towards other people’s money.” Beneath the surface, politics remain volatile, he adds. “One cannot not be slightly nervous about the prospect of having the extreme right or the extreme left at the helm of France one day.”

It is nearly 3pm, the bistro has quietened down. Through the window, I watch the Rothschild who rebuilt the family’s French legacy and united two branches of the dynasty cross the deserted Rue de Saint-Simon to find refuge in the shade, suddenly looking a bit frail.

- Copyright The Financial Times Limited 2018.

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