Rothschilds prop up Zurich bank

THE Rothschild family yesterday agreed to commit Sfr150m (pounds 67.6m) of its own money to cover losses incurred by Rothschild Bank in Zurich in one of Switzerland's largest financial frauds, writes Jason Nisse.

Jurg Heer, a former senior executive of Rothschild Bank, is in prison in Zurich over offences linked to loans by the bank to companies connected with Karsten von Wersebe, the German-Canadian businessman whose Coutinho Caro property group collapsed last month.

The Rothschild family said yesterday it would take the losses into a new company to be run separately from the bank. 'The bank has effectively been refinanced,' said Sir Evelyn de Rothschild, chairman of Rothschild Bank. 'These loans should be taken out of the bank and they have been.'

A senior Swiss banker, Guy Wais, has been hired to take control of the bank. Mr Wais is general manager of Guerzeller Bank, a Zurich private bank partly owned by Midland Bank.

Sir Evelyn said the family had taken the steps to allow the bank to carry on with its core activities without having to worry about the von Wersebe loans, which may be irrecoverable. 'These loans had nothing to do with the core activities of the bank.'

The move will cost the family Sfr150m, half of which is being borne by the British side of the family, the rest by the French and Swiss sides. It is understood the moves will have no effect on N M Rothschild, the family's London- based merchant bank, which is also chaired by Sir Evelyn.

Rothschild Bank's accounts for the year to 31 March included provisions of Sfr99.8m, four times those in the previous year.

The Sfr150m of provisions are in addition to this and follow a review of the bank's loan book by accountants Coopers & Lybrand. At 31 March, the total capital of the bank stood at SFr197m.