Broken arrows

IFA cover story

By Stephen Blaxhall
Mon, 17 Mar 2008

Page 1 of 2

Key players spill the beans on the best and worst of times that followed Westpac's historic buyout of Rothschild and BT.

The very name Rothschild conjures up images of opulently expensive wines and blue-blood banking services. The first issue of Investor's Advisor highlighted Rothschild in the magazine's first Manager Spotlight.
 
However, within a few short years its august name in the field of asset management had been eradicated in Australia.    

On April 23, 2002, Westpac made a $323 million acquisition of the business formerly known as Rothschild Asset Management Australia. This soon became a three-way integration following Westpac's acquisition of BT in August 2002.

According to Rothschild sources involved in the process, the Westpac acquisition was over $100 million more than the next offer. Three other serious bidders took part in the process, HSBC, Advance Bank and Templeton Investments.

According to a number of former staff, a once vibrant and entrepreneurial can-do spirit was wiped out in the wake of the two mergers.

"I must say that the first integration was done equitably, reasonably quickly, very efficiently and the people who lost their jobs lost them on a merit basis and I think were given decent cheques," former Rothschild director and alternative investments head and BT alternative investments head Richard Keary says.

"I really don't think David Clarke [Westpac's then group executive for business and consumer banking] really got the credit he deserved for that."

Following the Westpac acquisition of Rothschild Asset Management, the group eventually changed its name to Sagitta Wealth Management. Its investments managing director during that period, Guy Strapp, said at the time chaos surrounding the merger between Westpac and Sagitta was kept to a minimum, but according to other staff, once BT was thrown into the mix, things changed dramatically.
 
"The second integration was characterised by a lack of merit, equity, transparency and dignity," Keary says.

He says while there were some staff losses during the first integration, the second merger brought about wholesale culling of Rothschild support staff. 

"I can't think of anyone from the product teams who came through, super or non-super," he says. 

"The quality of that sales force may not have been evident to BT, but it has gone on to better things with people like Paul Barrett and Chris Larsen heading up business lines elsewhere.  

"I think it should also be said that Westpac people did not fare any better outside the investment team."

Broken arrows

IFA cover story

By Stephen Blaxhall

Page 2 of 2

The only team that wasn't decimated was the investment group, he says.

"Essentially this was because the BT investment team, or what was left of it, had no credibility at all and were given cheques to go away," he says.

"It's a classic case of that there is more money in failure than there is in success."  

According to former Rothschild associate director and corporate affairs head Rob White, who was offered a role as communications director in the merger, the cultural change in the organisation meant many decided to leave.

"The treatment that some of the staff got meant they just lost heart and as a result if you weren't pushed people would voluntarily go," he says.

"It perhaps reflects the success of Rothschild's culture ultimately though that many have left and gone on to do such successful things.

"I know it's looking at it through rose tinted glasses and there were a lot of irritating things about Rothschild, but people were given an opportunity."

Rothschild Asset Management only ever totalled around 150 staff and new staff had to work within the group's call centre for around two years as a grounding to understanding investments.

White says the entrepreneurial nature of the Rothschild culture did mean things were sometimes done in a hurry.

"Like any business it could be frustrating, but there really was a culture and this was a lot down to chief executive Peter Martin instilling a can-do culture," he says.

"The unofficial slogan at Rothschild was JFDI, just f------ do it, because we were impatient to get things done. We were risk takers and that scared the hell out of the bank."

According to another former Rothschild staffer, Peter Walsh, the process of getting projects up and running relied on very little bureaucracy.
"Individuals were encouraged to come up with innovative ideas and implement them," Walsh says.

"If you had a good idea, a director would say JFDI. You'd put together a two pager for the executive committee, then off you'd go.

"There were a lot of smart people given autonomy to build a good business and that's why it was so successful."