Is Europe becoming more powerful at Goldman?

Goldman's European business has traditionally played second fiddle to its US operation, but recent moves at the senior end suggest that something of a power shift is occurring.

Richard Gnodde, co-chief executive of Goldman's European operation, has been handed the additional responsibility of co-head of investment banking alongside US-based David Solomon and John Weinberg.

London-based Yoel Zaoui has also been given the role as co-head of global mergers and acquisitions, alongside Gene Sykes in Los Angeles.

This, in itself, isn't indicative of a power shift towards Europe. However, the reshuffle follows the elevation of Michael Sherwood, vice chairman and co-CEO of Goldman Sachs International, to chairman of the bank's Partnership Committee.

This committee oversees issues related to recruitment, training, performance evaluation and, perhaps significantly, succession planning.

Europe hasn't been a particularly expansionary area for the bank. Late last year, Lloyd Blankfein said that headcount in G10 countries had largely remained static, while Asia and other emerging markets were targets for recruitment.

Similarly, the proportion of managing directors promoted in Europe remains diminutive compared with the US. This year, around half of the record 321 people promoted to MD were state-side, with 28% in Europe and 22% in Asia.

Still, EMEA seems to be an improving area for the bank. It topped the EMEA M&A league tables in the first quarter of this year, according to Thomson Reuters figures, up from second at this point in 2010, and finished second for the full year 2010 from fifth in 2009. Globally, however, Goldman slipped from first to fourth in the M&A rankings in Q1 2011.

And while most investment banks are continuing to ramp up in Asia, revenues are not accelerating quickly enough to match the increasing staff costs. At Citi, for example, margins were only 20% in Q1, compared 37% in EMEA.

Goldman already pays its European employees better than elsewhere, and the fact that senior bankers on the Continent are manoeuvring into more powerful positions is surely good news for the London operation.