Not just because he’s one of the most accomplished M&A bankers in the industry (just like remaining co-head Gene Sykes), but because by some counts he joins around 50 partners who have walked in the past year. Almost all in the primes of their careers (in their 40s to early 50s), they will end up elsewhere in the business. It’s a brain-drain of epic proportions.
Some years ago, I recall hearing a rumour that a Goldman partner had decided to jump ship to CSFB. He called me and I remember him telling me: “Look, I’m a Goldman Sachs partner. Once you make partner here, you never leave”. He wasn’t then nor is he now particularly given to bouts of jollity. He was being deadly serious. How times have changed.
The management committee – which includes the 10 members of the ExCom as well as the business-line heads – has been chopping and changing as new faces replace old. At the same time, whispers about the bank splitting the chairman and CEO roles refuse to go away.
The latest talk has it that Lloyd Blankfein becomes chairman and relinquishes his CEO role to close ally Gary Cohn, with vice chairman Mike Evans taking over Cohn’s duties as president and COO. Mind you, I don’t get the impression that such a change is imminent, but, hey, what do I know?
Ever since the global financial crisis broke in 2008, Goldman has been the subject of fierce criticism, not to mention lawsuits and investigations from a wide spectrum of politicians, judges, regulators, consumer groups, the media, you name it
Ever since the global financial crisis broke in 2008, Goldman has been the subject of fierce criticism, not to mention lawsuits and investigations from a wide spectrum of politicians, judges, regulators, consumer groups, the media, you name it. This comes on top of seminal regulatory changes being imposed on the industry, lower profits and lower bonuses. The game has changed and firms – including Goldman – are being forced to change with them.
In October 2011, I wrote a feature in IFR’s Review of the Year about generational change in investment banking. “The only global firm that has resisted the temptation to change its top management ranks since the crisis is Goldman Sachs,” I wrote. “In the circumstances … the firm’s immutability is extraordinary,” I said.
I think I spoke too soon. As the ink was drying on that piece, Ed Eisler and David Heller, two of the four global heads of the powerful securities division that makes the bulk of the firm’s profits, quit after 18 and 22 years, respectively. I hear that Heller had been talked about as a potential future leader of the firm, so his departure must have hurt.
Around the same time, Edward Forst, co-head of the investment management division and close to Blankfein, resigned after a Goldman career spanning ‘only’ 16 years. Yusuf Alireza, co-president of Asia-Pacific ex-Japan, head of Asia trading, resigned after 19 years to take up a position as CEO of Singapore-based global commodity traders Noble Group. Donald Mullen, global head of credit and mortgage trading, also stood down; while late last year, Kevin Kennedy, regional head for Latin America, retired after almost 38 years of service to the firm,
Deep talent bench
High-calibre firms like Goldman benefit from having deep talent benches, so the new faces being appointed to the management committee and into senior positions are performers with strong track records.
With prior apologies for the laundry list of names, the highly regarded Isabelle Ealet, formerly global head of commodities, was promoted to be one of the three global heads of the securities division, along with incumbents Pablo Salame and Harvey Schwartz. Stephen Scherr, global head of the financing group, was appointed to the management committee and added regional responsibilities for Latin America to his docket.
During previous periods of strife, Goldman’s tight culture sustained it, and the firm has been all the stronger for it
Other new faces include Eric Lane (promoted to run investment management with incumbent Timothy O’Neill) and Ashok Varadhan (head of macro trading for emerging markets). Jeffrey Verschleiser (global head of mortgage trading) and Justin Gmelich (global head of credit trading) replaced Mullen; Paul Russo, Michael Daffey, and Martin Chavez were appointed co-COOs of equities; Enrico Gaglioti became global head of equities sales; while John Willian was named global head of securities services, futures, and clearing. Ram Sundaram, global head of principal funding and investment, now also oversees FICC in Latin America, while Nick Burgin is global head of G10 foreign exchange trading. Thomas Cornacchia was named head of FICC sales in the Americas.
Asia, too, has been a flurry of new faces, David Ryan continues as sole president of Asia-Pacific ex-Japan but he relinquished his investment banking responsibilities to Matthew Westerman (former global head of ECM) and David Dees (previously head of financing in Asia-Pacific). James Paradise (co-head of prime brokerage in London) and Eiji Ueda (co-head of FICC in Japan) moved to Hong Kong to take up roles as co-heads of Asia-Pacific securities. Kostas Pantazopoulos, global head of interest-rate trading, took on additional responsibility for Asia ex-Japan macro trading, while Hsin Yue Yong was promoted to co-head investment banking for Southeast Asia, along with Brooks Entwistle.
I could go on. I’ve no doubt that the firm’s new faces will step up to the plate, but bigger issues are afoot. During previous periods of strife, Goldman’s tight culture sustained it, and the firm has been all the stronger for it. But now the very culture that has been such a unifying force is itself under intense scrutiny. The executive committee needs to figure out not just what it wants to be in the new world, but what it needs to be and more to the point what it’s allowed to be under the new regulatory regime.