Morning Coffee: Confusion reigns at Goldman Sachs. Women aren't the only ones underpaid in finance

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Goldman Sachs Chairman/CEO Lloyd Blankfein has thrown some doubt on the date of his departure, claiming that the Wall Street Journal article saying that he’ll step down by year’s end didn't come from him.

Even if the report of his exit is a bit premature, he hasn't totally dismissed it or denied that he’s considering stepping down soon. Therefore, there is a lot of uncertainty at the firm as speculation about his succession plan runs rampant. Worse, the Financial Times says there's a "naked powerplay" between Blankfein's potential successors.

It's the @WSJ's announcement...not mine.  I feel like Huck Finn listening to his own eulogy.

— Lloyd Blankfein (@lloydblankfein) March 9, 2018

David Solomon and Harvey Schwartz, both co-president and co-COO, have been CEO candidates for at least five years and are now the odds-on favorites. Heavyweights such as John Weinberg, Michael Sherwood and Michael Evans have  left Goldman.So too has Gary Cohn. After toiling away as the president of Goldman Sachs for 11 years, waiting for his chance to become CEO, Cohn came to realize that Blankfein was probably never going to retire and took a job working for Donald Trump. After 13 months of horror, he finally quit, only to hear the news of Blankfein’s impending retirement shortly thereafter.

With only two serious contenders, Goldman employees are already said to be complaining about the powerplay between Schwartz and Solomom as they both make media appearances.  The FT says the two encapsulate the traditional schism between trading and IBD. - Schwartz comes from the trading side, but his “brusque manner” means that everyone does not support him. Solomon was co-head of the investment banking division but some consider him to be “just a corporate finance guy” rather than an elite M&A banker. Some want Blankfein to consider senior investment bankers Gregg Lemkau and John Waldron, but they are long-shots.

Whether Blankfein is going or not, the WSJ article willl lead to increased uncertainty at Goldman. In turn, that uncertainty will lead to increased politics at the bank, particularly given that 2018 is a year when Goldman makes a new round of partners. The timing is bad: after a difficult 2017, Goldman needs to focus on serving clients and increasing revenues. Instead, people there will be jockeying for position under potential a potential new boss.

Separately, with a U.K. government deadline for revealing the gap between what male and female employees are paid looming and International Women’s Day on March 8, everyone has been talking about the gender pay gap, both in financial services and beyond. But women aren’t the only ones getting a raw deal on compensation. KPMG pays its white staff and equity partners 34% more on average than colleagues from ethnic minorities, according to the Sunday Times.


Deutsche Bank CEO John Cryan said the bank’s top executives will forgo bonuses for a third consecutive year. (WSJ)

Citi's U.S. head of electronic cash trading is out, one of several senior management moves in a shakeup of the division in recent weeks. (Business Insider)

The Securities and Exchange Commission has dropped a civil case against the sister of Benjamin Wey, a New York financier who was arrested in 2015 on charges he illegally profited from “reverse mergers.” (WSJ)

Elizabeth Willard Thames abandoned a successful financial services career and embraced frugality to retire at 32 and move with her family to a homestead in the Vermont woods. (The Guardian)

J.P. Morgan poached a senior energy investment banker from Bank of America Merrill Lynch as strengthening crude prices signal the prospect of greater deal activity. (WSJ)

Why is Jamie Dimon sending bankers to the Fertile Crescent? (Bloomberg)

UBS boosted CEO Sergio Ermotti’s pay and increased the bank’s bonus pool by about 6% after underlying profit increased. (Bloomberg)

The Hong Kong Securities and Futures Commission banned UBS from sponsoring initial public offerings for 18 months and fined it HK$119m (US$15.2m). (FT)

China, Hong Kong and Canada are among the economies most at risk of a banking crisis. (Bloomberg)

President Emmanuel Macron has cut France’s wealth tax will let City bankers who move to Paris pay tax on only half their income. (The Sunday Times)

Share pumping and Picassos – a $50m scam killed a London brokerage. (FT)

Why Blockchain will survive, even if Bitcoin doesn’t. (WSJ)

Frida Kahlo Barbie doll. (NYT)

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