The Fall and Rise of the French Rothschilds

‘Rothschild’ is a household name. It belongs to a family banking dynasty with a two hundred year lineage, reputedly once supremely powerful. Omnipresent historian Niall Ferguson has devoted two volumes to this history.

The Rothschild name is now bestowed on a significant global financial services group. The maintenance of family control has been a perennial imperative, ultimately restricting the size of the entities. That a family-controlled financial group still exists at all is a testament to its resilience.

The French banking arm of the Rothschild family almost disappeared entirely. The trajectory from near-obliteration to renewed major player in the French firmament is the subject of a recent book by Martine Orange, Rothschild: une banque au pouvoir.* Orange is a seasoned financial/economic journalist, part of the Mediapart group since its creation in 2008. Orange’s subject matter is treated in only several pages of the Ferguson tome, which peters out after 1945.

Ferguson loves his subject. For Orange, outsider and unbeliever, it is a courageous project. (The dramatic conversion of the radical author David Horowitz coincided with his mid-1970s immersion into the Rockefeller dynasty.) Hagiography is out of the question, and guns blazing will not extract the insiders’ personal reflections crucial for understanding. As Orange’s colleague François Bonnet notes: “No indignant denunciation in this book, but a cool autopsy of the most secretive of Parisian businesses”.

Elected in 1981, the Mitterand Presidency and the Parti Socialiste administration embarked on their pre-election promises to nationalize the commanding heights of the French economy. For deposit banks the bar for nationalization is latterly put at 1 billion francs of deposits (lowered from an original 5 billion francs); 36 banks, including Banque Rothschild, are nationalized (with owners well-compensated) in early 1982.

Some contemporary opinion thought that nationalization had done the family a favor. The Rothschild bank was in disrepair by the late 1970s, having been sidelined by the evolving financial demands of the consumer-oriented post-War boom. Family members were diverted by other interests (Guy, life style and horses; Alain, the broader Jewish community; Élie, the famous vineyards). The removed English Rothschilds were rather taken aback by exposure of the troubles (the English house itself was only awakened in the early 1960s from genteel decline by the entrepreneurial Evelyn).

With nationalization, the patriotic family is appalled by the affront to its status and dignity. Guy escapes to the US, where he declaims: “A Jew under Pétain, a pariah under Mitterand”. The family bunkers down over its future. Tension arises as to strategy between David (son of Guy, born 1942) and Nathaniel (son of Élie, born 1946). Harvard-trained Nathaniel is for aggression; the French David is for discretion. The family chooses David.

Nathaniel subsequently successfully blazes his own trail in the US. There is also Edmond, son of Maurice who was banished from the family business in the 1920s for attitudes deemed unsatisfactory. Edmond built an exceedingly profitable wealth management house in Switzerland, but there is an arm’s length relationship with the French relations.

David (with cousin Eric) is joined in 1988 by his younger step-brother Édouard, also US-trained and adventurous, and a workable synthesis of styles is achieved. But the important story involves the supporting cast of characters and the favorable backdrop.

Orange’s Rothschild is an alternative history of French capitalism over the last 30 years. It is a history of the importation of neoliberalism and of ‘Anglo-Saxon’ business culture on French soil, with turbulent consequences still playing out.

Of particular interest is the heady mix of different types intermingling for mutual benefit – the patrician David de Rothschild heading the new bank, faithful retainers, the political New Right, business establishment bigwigs, a new breed of takeover hustlers, dubious well-connected middlemen, opportunistic public servants, and not least the boorish unprincipled parvenu Nicholas Sarkozy.

A faithful employee (like his father before him), Jacques Getten pulls a marginal subsidiary out of the hat as a basis for reconstruction. There is lobbying of the government to convert P[aris] O[rleans] Gestion into a bank; the government says no. Not the right answer. Here Jewish community links help.

Robert Badinter is then Minister for Justice. He recounts his view of the between-the-Wars social hierarchy of French Jewry. At the bottom are the Yids, recent Yiddish-speaking émigrés. Then the petty bourgeoisie; then the well-to-do. Above them the Rothschilds, in the stratosphere. Badinter, of self-proclaimed Yid stock, is induced to intercede before Mitterand. The intercession is successful. PO Gestion becomes PO Banque in 1984, but without the name. Ferguson claims that ‘the government had the gall to prohibit the use of the family name’. But the government had bought the Rothschild name and retired it.

Enter Ambroise Roux. Roux was CEO of the electrical giant CGE (predecessor of Alcatel). Roux was bitter about the nationalization of CGE, and apoplectic about the usurpation of power by a Socialist/Communist alliance. Ironically, CGE had grown on the strength of state contracts. In 1983, Roux created the association française des enterprises privées (afep) as a focal point and lobby group for reaction. Roux never ceases to use afep as a vehicle to push for corporate deregulation and financialization.

Roux wants Rothschild’s name for his project. A mutual friend, happy to oblige, is Anglo-French rogue corporate raider and pathological anti-Red, Jimmy Goldsmith.

There are two more significant figures. First, Édouard Balladur. Georges Pompidou was Guy de Rothschild’s unlikely right hand man before he became Prime Minister (1962) and President (1969). Roux had been Pompidou’s business mentor. Balladur was Pompidou’s disciple and right hand man, but eschewing any Gaullist remnants in the elder. Rothschild was the fount of righteousness, and Balladur was attracted to the glamorous world of aristocratic high finance. Balladur, on the outer under President Giscard d’Estaing, was taken in by Roux at CGE.

Second, Claude Bébéar. Bébéar creates another centre of influence for the new breed, Entreprise et cité. David de Rothschild is signed up. Bébéar later (2000) creates the Institut Montaigne to further propagandise the message.

Bébéar engages in a series of takeovers of small insurance mutuals (to much displeasure), spearheading the massive consolidation of the insurance sector – Axa is the result. Bébéar finally swallows the insurance giant UAP in 1996. Bébéar is a key figure in the financialisation of the French economy. A key reflection of this phenomenon is the gradual displacement of industrial sector representatives at the helm of Medef, the employer federation, by insurance/financial forces.

Under the aegis of these luminaries, the counter-revolution of all the losers and self-proclaimed losers begins. The natural order has been upset; it must be re-established post-haste. Roux even wanted to overthrow the entire post-War ‘consensus’ – France’s ‘New Deal’, constructed in response to the desperate years of occupation, subjugation and collaboration. This radical agenda was well-expressed by Denis Kessler, Bébéar’s protégé and sometime Medef executive, in 2007: “The French social model is the pure product of the Conseil national de la Résistance. Take all that which has been put in place between 1944 and 1952, without exception. It is a matter today of saying goodbye to 1945, and of dismantling systematically the programme of the CNR! To disavow the founding fathers is a problem only in psychoanalysis.”

Partial success comes quickly. The Right is elected to office in March 1986. Balladur becomes Finance Minister under Prime Minister Chirac. One of Balladur’s first actions is to bestow on Roux a high order of the Légion d’Honneur. The elaborate ceremony (at taxpayer expense) brings together all the fellow travellers – neoliberalism celebrates its first victory at the centre of power in France.

Balladur also turns to the Rothschild ‘plight’. In October PO Banque (which was going nowhere) becomes Rothschild & associés.

Needing a kick start, the enterprising Getten oversees some dodgy manoeuvres (tour de passe-passe). Representative is the case of Francarep, an oil exploration company in which PO held a minority share. Getten corruptly (albeit then ‘legally’) engineered majority control of Francarep and subsequent absorption within the Rothschild umbrella, for a tidy profit. But the scene is set for the investment bank’s growth and success, if slow, as the environment becomes exceedingly propitious.

First, there is the privatization bandwagon. Balladur sets to work. In Autumn 1986 Balladur pushes forward the privatization of Paribas. The job is given to Rothschild, a minnow. Paribas is significant – its holdings ranged across the heart of French capitalism, and fierce battles had been waged over its control. Balladur wanted not merely privatization but the new breed in charge.

Rothschild is also soon given the privatization of armaments firm Matra. The process is controversial and chaotic (not least because involving the belligerent Jean-Luc Lagardère), and Matra is privatised under value after the 1987 crash. Rothschild acquired more brownie points regardless. Balladur continues the same agenda as Prime Minister in 1993. Balladur hands the partial privatization of the industrial giant Renault to Rothschild.

The initially worrying election of the Jospin Parti Socialiste government in 1997 soon demonstrated (especially with Dominique Strauss-Kahn as Finance Minister) that henceforth privatization would be a bipartisan policy.

Second, the new breed fostered the culture of ‘mergers and acquisitions’ and it spread quickly. Buying, selling, merging – all needed an investment bank or three on board.

Third, Lazard Frères was the investment banking world’s centre of gravity. But Lazard had a cowboy reputation, had internal conflicts, was seen as not respecting confidentiality and as often pursuing self-interest over that of clients. The state, in particular, needed a second (French) player. Rothschild was differentiated by its discretion, perennial attachment to the vendor rather than the purchaser, and non-participation in the foreign takeover of a French company. Rothschild benefited from the occasional hiring of disenchanted Lazard staffers (Jean-Claude Meyer, Olivier Pecoux, Christian de Labriffe).

Fourth, the culture of the bureaucracy was changing. Previously, a cadre issuing out of elite schools generally became implanted in a career of public service. Now, a cadre seeks experience and contacts (especially within the Finance Ministry) before moving into the finance sector on an escalating pay scale. The revolving door (pantouflage) was now institutionalized, indeed de rigueur, and Rothschild was to be a beneficiary of talented ex-bureaucrats (Jean-Charles Naouri, François Henrot, Nicolas Bazire, François Pérol, Emmanuel Macron) who would initiate and manage the deals with established contacts.

Thus does Rothschild benefit mightily from the new age. A similar bonanza on the same foundations facilitated rapid growth of the English Rothschilds, especially after the Thatcher ascendancy in 1979.

Connections and information were fundamental to growth (shades of Nathan Rothschild’s legendary advance knowledge of Wellington’s victory at Waterloo). Thus Jean-Claude Meyer gets out his address book in 1990 and pulls off a merger between Swiss Suchard and a Kraft subsidiary. The deal is significant both for its scale ($4bn) and its international dimension. More commissions flow from this success. Gérard Worms, on the skids at Suez, joins Rothschild in 1995 and brings with him his linkages with the bigwigs at France’s CAC 40 companies. The ubiquitous middleman Alain Minc, employed at arm’s length but deeply mired in conflicts of interest, perennially offers leads and contacts. In a sense, this is the ‘knowledge economy’, finance sector version – one firm’s segment of a large scale insider trading system.

Across the segments, French capitalism becomes a battlefield and there is much blood left on the floor.

Representative is the privatization and subsequent strategic direction of France Telecom. Enter François Henrot. The ENA-trained Henrot landed in the Direction générale des telecommunications in the 1970s. In the early 1980s Henrot moved to Paribas bank, witnessing a company in increasing turmoil for past excesses (Paribas was taken over by BNP in 2000 after a bloody fight). Balladur as Prime Minister initiates the privatization of FT in 1993. Henrot (via Minc) is offered the top job at FT by Prime Minister Alain Juppé in September 1995. He lasts eight days, to be replaced by Michel Bon.

The reason is that Henrot expressed his intention to transform FT’s public service culture overnight. Henrot is soon hired (via Minc again) by Rothschild. From the bank, Henrot supported Bon in his buying spree that generated a mountain of debt. As well as €30bn of taxpayers’ funds to keep FT afloat, succeeding CEOs Thierry Bréton and Didier Lombard imposed the brutal cultural transformation that led to multiple employee suicides. The story is outlined in my The Privatization From Hell.

Henrot, who remains a central non-family figure at Rothschild, later ‘philosophized’ on his career. Any failings, mistakes were to be attributed elsewhere – the state was to blame, markets were fickle; shit happens!

Bréton becomes Finance Minister in February 2005 (until May 2007), from which vantage point he blacklists Rothschild for having contributed to the fiasco at FT. But Ministry functionaries themselves still want Rothschild as a counter to Lazard, and a place of future employment, so the bank is soon back on the public teat. Bréton himself is then given a job in Rothschild’s non-event New York office – a bribe? Bréton subsequently becomes chairman/CEO at IT company Atos Origin, whose financial advisory business goes to Rothschild.

The ultimate in dodgy dealings involves François Pérol. Pérol had a classic central agency career, becoming Deputy Director (overseeing the finance sector) in the office of successive Finance Ministers (Mer, Sarkozy) from May 2002 to November 2004. In 2005 he joins Rothschild. There Pérol presides over the merger of two small investment banks belonging to the two major mutual savings bank networks, the traditionally conservative Banques populaires and Caisses d’épargne. Natexis and Ixis become Natixis, a process that Pérol had begun in the Ministry. Apart from the inherent danger of the creation, Pérol’s continuity of involvement across public and private spheres was illegal, a clear transgression of the strict (‘deontological’) procedures in place to prevent conflict of interest.

Natixis staff immediately went troppo, delivering billions of euros of losses to its staid parents. With Sarkozy’s election to the Presidency in May 2007, Pérol becomes Chief of staff at the Élysée, proceeding to turn that office into a quasi-investment bank on the inside. In that capacity, Pérol presides over the announced merger of the two imperilled savings bank networks in October 2008. President Sarkozy then installs, unilaterally and illegally, Pérol at the head of the two networks in February 2009, to manage the merger, involving massive disruption, massive retrenchments, and €5bn in public funds to prop up the faltering edifice.

This monumental scandal has been forensically pursued by Orange’s Mediapart colleague, Laurent Mauduit, and has received zero coverage in the English-language media. Pérol remains CEO of the combined entity BPCE.

Rothschild involvement in attempted Franco-German corporate alliances is also instructive on the prospect of transcending national boundaries as part of the European project.

The creation of EADS, with Rothschild as handmaiden, is representative. Newly elected, in June 1997 Lionel Jospin announces at the Paris Air Show that one needs a European defence sector to parallel economic and monetary Europe. The race is on. Rothschild’s Jean-Claude Meyer knows the sector intimately, and pushes a Franco-German alliance (Aerospatiale and Daimler had combined their helicopter divisions in 1992). Civilian Airbus was an extant parallel, having been organised to counter Boeing’s global dominance.

The process was unsavoury. Aerospatiale was merged with the smaller Matra, with Matra’s Lagardère gaining disproportionate influence. Daimler management were torn between Anglo-America and Europe, blackmailing France for greater leverage with Rothschild support and complicity from Finance Minister Strauss-Kahn. EADS was ultimately formed in 2000, with the French share reduced unreasonably to 50%, and with Lagardère as the French spokesman, both contrary to French interest. A European champion was to be forged at any cost.

EADS head office is in Amsterdam, a notable haven for tax evasion. Lagardère senior died in 2003, with his dysfunctional role bequeathed to his son Arnaud. In 2010 playboy Arnaud missed 8 out of 10 Board meetings. Lagardère Junior missed his scheduled appointment as EADS Board Chairman in May 2012 to watch a French Open tennis match involving his mate. Shit happens. This element of high farce is finally due to end with the Lagardère interests agreeing to sell its EADS shareholding.

Rothschild was also involved in the 1999 merger between Rhône-Poulenc and Hoechst. Located symbolically in Strasbourg, it was organised as a marriage between equals. But it didn’t work. The struggling entity (Aventis Deutschland) was taken over by French Sanofi. Investment bankers seem to be poorly educated on the rudiments of nation-specific corporate cultures as well as on public versus private sector cultures. The caravan moves on.

Orange claims that the Germans were not amused. Having lost Mannesmann to Vodaphone, and Hoechst to the French, it would henceforth be Germany Numero Uno, once reunification was bedded down. The European Union in general is now run essentially in the German national interest, but the French still haven’t cottoned on.

Orange also claims that the French state has effectively renounced industry policy. Apart from the mentality, it has lost the capacity for industry policy. Financial imperatives have taken over. The investment banks have become an integral arm of the Finance Ministry, while eschewing responsibility for outcomes. While raking in fees on endless mergers/takeovers/rationalisations, the feel-good self-reassurance was that the investment banks were facilitating the creation of French (and then European) ‘national champions’. France’s balance on current account went into deficit in 2005 and it will remain so for the foreseeable future. Whence the national champions?

The French Rothschilds initiated an ‘entente cordiale’ with their English relations in 1990, leading to a permanent fusion of the two clans in 2003. The Rothschild presence in the US has remained an outpost, but the presence has been successfully embedded elsewhere – Latin America, China (via Hong Kong and Jardine Matheson), Australia. Rothschild opened an office in Frankfort (returning to its ancestral origins) in 2005, and the German office has established Russian links (courtesy of the revolving door hiring of ex-German Chancellor Gerhard Schröder). The next generation of Rothschilds are being groomed for succession.

A note at the end. The capable Finance Ministry bureaucrat Emmanuel Macron served under the chameleonic Jacques Attali in the production of Attali’s (neoliberal) report for Sarkozy on re-establishing economic growth in France. Macron joins Rothschild on Attali’s recommendation. Macron then (purportedly out of conviction) works simultaneously for the Hollande Presidential candidacy. Following the Hollande victory, Macron joins Hollande at the Élysée. Orange cites David de Rothschild as noting: “It is the tradition of the house to put itself at the service of the Republic”. Rothschild is an arm of the French state and the state is an arm of Rothschild.

Into the Twenty-First Century, The Rothschild family consortium has been transformed into a very healthy edifice. Unfortunately, one can’t say the same about France.

Evan Jones is a retired political economist at Sydney University. He can be reached at

* Martine Orange, Rothschild: une banque au pouvoir, Albin Michel, September 2012.




Evan Jones is a retired political economist from the University of Sydney. He can be reached