Rothschild's old pal may learn the true cost of friendship

Yesterday's acquisition of a 20 per cent stake in the parent of banking group NM Rothschild by Jardine Strategic Holdings has more than just a hint of old friends cosying up together.

The two companies have been doing business since 1838, and according to David de Rothschild, the chairman of the bank, his family has been friends with the Keswick family, which controls Jardines, 'for many, many years'.

Who better, then, than Jardines chairman Henry Keswick to step in and help out his old pals the Rothschilds when they were looking for an amicable investor?

Jardines bought its stake from another old Rothschild associate, Britain-based insurer Royal & Sun Alliance.

Alliance Assurance was founded by Nathan Rothschild in 1824 and its descendant has owned a stake in the bank for the past 25 years.

But as a listed company - unlike Rothschild - Royal & Sun is subject to the discipline of the stock market, and recently the vultures have been circling. Since the end of 2000, Royal & Sun's shares have shed 80 per cent of their value, prompting the insurer to divest assets to stave off potential takeovers.

For the Rothschilds, Jardines is the ideal candidate to replace Royal & Sun. As another family-controlled firm, with similarly gentlemanly management, Jardines looks to be a safe pair of hands for a long-term passive shareholding.