L.F. Rothschild: From Strength to Struggle in the Financial World

L.F. Rothschild has a rich history that spans over two centuries. Founded in 1849 by Nathan Mayer Rothschild, the firm initially focused on commodities trading.

The Rothschild family's financial expertise and strategic partnerships helped the firm expand its reach and influence in the financial world. They quickly became a prominent player in the global financial landscape.

However, L.F. Rothschild faced significant challenges in the late 19th and early 20th centuries, including the Panic of 1873 and the Great Depression. These events forced the firm to adapt and diversify its business operations.

Today, L.F. Rothschild continues to operate as a leading investment bank and financial services firm, with a strong presence in the global financial markets.

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L.F. Rothschild was founded in 1899 by Louis F. Rothschild, not related to the European Rothschild family. He took up the offices and business of Albert Loeb & Co. at 32 Broadway in New York City, New York.

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The firm's primary business was sales and trading of fixed income securities, and it also had an arbitrage group as well as retail brokerage and wealth management operations.

In 1977, L.F. Rothschild merged with C.E. Unterberg, Towbin, and the firm was known as L.F. Rothschild, Unterberg, Towbin. It moved to 55 Water Street, leasing the 45th and 46th floors.

The firm was known for its merchant banking investments, particularly in high-technology companies, and it emerged as the leading underwriter of initial public offerings in the early 1980s.

Some notable companies that L.F. Rothschild took public include Intel, Cray Research, and biotechnology company Cetus Corporation.

Here's a brief timeline of key events in the history of L.F. Rothschild:

By the end of 1989, the firm had gone from a peak of 2,200 employees to 45.

L.F. Rothschild faced significant challenges in the late 1980s, including $56 million in arbitrage and over-the-counter trading losses on Black Monday, October 19, 1987.

The firm's management upheaval and struggles for survival even before the crash made its fate all but sealed. Rothschild lost another $15 million when a firm with which it did business went bankrupt.

The firm's net loss for the fourth quarter of 1987 was a staggering $128.8 million on total revenue of just $32.5 million.

L. F. Rothschild Holdings, a once high-flying brokerage firm, was forced to merge with a unit of Franklin Savings, an Ottawa, Kan., savings and loan, after suffering $56 million in arbitrage and over-the-counter trading losses on Black Monday, October 19.

The firm's management upheaval and struggles for survival were exacerbated by a $15 million loss when a firm with which it did business went bankrupt.

Rothschild posted a staggering net loss of $128.8 million for the fourth quarter of 1987 on total revenue of just $32.5 million.

The firm has cut about 1,000 jobs, leaving 1,200, since October, selling off or shutting down retail branches and withdrawing from the public finance and municipal bond trading businesses.

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Further job cuts are expected.

Franklin, which has $9 billion in assets, pumped $30 million in new capital into the ailing Rothschild.

Rothschild's stock, which went public at $20.50 in March, 1986, closed Monday in New York Stock Exchange trading at $3, down 87.5 cents.

The deal is "the best that could have been obtained for Rothschild's shareholders and employees", said Perrin Long, an analyst with Lipper Analytical Services.

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L.F. Rothschild Holdings Inc. is an investment banking house struggling to stay independent. It announced a plan to slash its staff by 40 percent, which is a significant reduction.

The company will concentrate only on services in which it can turn a profit. This means they will focus on areas that have historically been profitable for them.

Rothschild will cut its staff to about 1,200 within six months, down from 2,000 at the start of 1987. This drastic reduction will likely be a tough adjustment for employees.

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The company has already laid off about 175 people before Monday's reorganization, and another 100 to 125 received their pink slips that day. This is a clear indication of the challenges they are facing.

Rothschild has been rocked in recent months by management disputes and the Oct. 19 stock market collapse, which cost it more than $35 million in equity capital. This has led to suggestions that the company is ripe for takeover.

The company will abandon other lines that have proved unprofitable or unlikely to make money. They will focus on fixed-income trading and sales, arbitrage, a retail brokerage business for high-net-worth individuals, over-the-counter market-making, and investment banking.

By eliminating clearance work, Rothschild will save money and free up about $55 million for the company.

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