The French arm of the LCF Rothschild Group, La Compagnie Financière Edmond de Rothschild, said its asset management and structured products businesses have been able to avoid 'the multiple pitfalls' of the sector. It was able to maintain significant production in 2008, when more than 100 products raised more than €2.9bn in assets under management, it said, in a report on the impact on its business of the collapse in confidence in long term investments during the economic crisis.
The firm said its focus on market scenarios, as well as simple, liquid and transparent underlyings, and 'rigorous selection of external issuers' had kept its reputation intact.
In addition, it said, it was able to stay competitive by focusing solely on its specialised asset management and private banking businesses, and maintaining a, "Sound balance sheet and robust and liquid shareholders' equity by avoiding risky investments, and thanks to conservative proprietary-account management and strict risk control."
Nonetheless, as a result of the collapse in the financial markets, Rothschild Bank's assets under management fell by 23.5% to €22.6bn over 2008; the report points out that over the past ten years, the bank's AUM has increased by almost +14% per year, whilst the equity markets have stagnated.
"It is worth reiterating that our Group is little present in short-term money market management (less than 20% of assets under management) and that it specialises rather in long-term assets such as corporate bonds, equities, multi-management, structured products and private equity, which were all significantly affected by the 2008 crisis," concluded the report.
The Rothschild bank reported a decrease in its private banking business assets under management of €9bn, the 10% fall offset to some extent by funds inflows of more than €2bn. Across all asset classes, AUM was impacted by the sharp sell-off in the financial markets it said.