Edmond de Rothschild in France has sold its private equity fund of funds business to management as the private bank seeks to adapt to tougher capital requirements, the Financial Times said.

David Seligman, founder of the unit and a former SG Warburg banker, and his management team have taken over Rothschild’s 75 per cent stake in Private Equity Select, an investor in small European buy-out funds with €200 million ($277 million) in assets under management.

Select and Edmond de Rothschild Group, the holding for the family’s French and Swiss banking and asset management businesses, are set to announce the move this week, the newspaper said, citing unnamed sources.

The private equity business, which caters mostly to family offices in the US and elsewhere, was set up in 2003 with La Compagnie Financière Edmond de Rothschild Banque as anchor investor and majority owner. It is to be renamed Seligman Private Equity Select.

The report said banks are shedding private equity and hedge fund interests to cut capital costs – increased by new regulations – as well as adapt to rules making it harder for banks to hold such supposedly high-risk assets. Other firms that have taken this move include Citigroup and Bank of America.