Goldman is not immune from the pressures of the economy and Wall Street’s downturn. But the venerable bank has managed to stay on top of its game. While worldwide investment bank revenue tanked 26 percent in the first half of 2012, Goldman’s institutional client services segment fell 5 percent to $9.6 billion. Morgan Stanley’s sales and trading revenue fell 32 percent to $4.4 billion.
Writing for DealBook, Steven Davidoff explores why and how Goldman’s clients have remained true, and the investment bank has survived as well as it has (Greg Smith’s forthcoming memoir Why I Left Goldman Sachs” not withstanding) – its stock price being up 25 percent this year.
For one, competitors have screwed up. JPMorgan has Jamie Dimon and its London Whale. Barclays has its Libor scandal and Citi is having an identity crisis. Goldman, meanwhile, has sidestepped much of these ups and downs:
Goldman has taken steps to heal itself from self-inflicted wounds. In the uproar after the financial crisis, Goldman Sachs formed a business standards committee to examine practices and recommend change. The committee put forth 39 recommendations to improve governance and client relations. In response, the firm has fundamentally realigned its business segments. Goldman has also overhauled its board, revised its public relations strategy and put in place stronger clawback policies.
The bank also moved quickly to shake of financial crisis drama by paying off $550 million in SEC fines related to mortgage security charges. It also resisted regulatory pressure to divest its private equity arm – and used outside money to finance it.
Writes Davidoff: “Goldman is becoming the last pure-play, big investment bank." In a world where business consultants preach that a focus on your best business lines is necessary for success, Goldman is likely to have an advantage over the banking conglomerates, concludes Davidoff.
UBS, JPMorgan, BofA, and GE are among banks implicated in a quiet government crackdown on bid-rigging.
Lehman Brothers’ bankruptcy estate is suing J.P. Morgan Chase over the bank's more than $2.6 billion in derivatives claims.
Japanese Central Bank expands its asset-buying.
The number of millionaires in Asia overtakes North America.
Survey finds bakers are most motivated by short-term performance.
U.K. finance workers received a third of the £37B paid out in bonuses last year, despite making up 4% of the workforce.