Goldman Sachs has swooped on a senior Morgan Stanley commodities salesman as it starts to come good on promises to hire new employees to revive the flagging unit.
Benno Meier, who headed up a commodities sales function at Morgan Stanley that sold products to retail and wholesale investors, has just joined Goldman Sachs as a managing director in commodities sales. He left Morgan Stanley in January.
Meier worked at Morgan Stanley for 12 years, having joined from Barclays in 2005 where he was a commodities strategist.
He is the first senior commodities recruit to emerge at Goldman Sachs since it reportedly launched a new hiring spree to bring in “star” salesman (and some traders). Goldman’s commodities unit has around 180 employees, according to Bloomberg, and it has failed to replace senior departures in recent years in a bid to cut costs in the unit.
Goldman’s fixed income currencies and commodities (FICC) unit has been struggling throughout 2017, and the second quarter was particularly brutal – with revenues dropping by 40% year on year. There was a (slight) recovery in Q3, but Goldman’s FICC revenues are still down 23% year on year for the first nine months of 2017 – or a $1.26bn drop.
Much of these woes can be laid at the feet of its struggling commodities unit. CFO Marty Chavez said during that bank’s Q3 results that “commodities inventory”, or its exposure to the commodities market, was responsible for half of that 23% decline and “of that amount, half of that occurred in the second quarter”. Q2 was the worst quarter for Goldman’s commodities unit since it became a publicly-listed company, he said.
Meier is therefore the first senior hire since Goldman decided to replenish its decimated commodities workforce two months ago. He’s also one of the few senior ex-Morgan Stanley commodities markets staff to stick with banking.
In 2015, Morgan Stanley said that it was moving away from the riskier parts of commodities trading, and sold its physical oil trading business to Castleton Commodities.
Senior staff have been leaving Morgan Stanley’s commodities unit over the past 18 months. Amrik Sandhu, its EMEA head of commodities, left to found his own commodities trading and advisory firm, InsideOut Advisors, in July 2016, while Yann Murciano, its head of base metals, left last year to found peer to peer lending company Blend Network. Peter Sherk, the former co-head of commodities at Morgan Stanley, is now CEO for North America at energy trader Mercuria.
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