Morning Coffee: Goldman Sachs restructuring could hurt traders’ bonuses Deutsche Bank MD was cut equally at the expense of her salary.

Goldman Sachs deserves full praise for secrecy. Everyone knows Credit Suisse is planning a major restructuring announcement later this month, but who knew Goldman Sachs was planning its own restructuring? No one, until the Wall Street Journal reported the news late last night. Clearly, Goldman’s is less dramatic. Credit Suisse is planning changes that could result in layoffs of 6,000 people and the sale of a securitization business and some Swiss assets, but Goldman’s intentions are milder. We plan to streamline our organization into three divisions: Investment Banking & Trading, Asset & Asset Management, and Transaction Banking. This compares to the four “sectors” the company currently has: Investment Banking, Global Markets, Wealth Management, Consumer and Wealth Management. Unlike Credit Suisse, Goldman’s reorganization is not explicitly linked to layoffs and can be viewed simply as a change in internal nomenclature. However, you might think that cuts will come as a result. Merging departments is a well-known path to “efficiency” and can reduce the need for two sets of staff in some support functions. It can also lead to changes in upper departments. Heads of smaller departments who have not been appointed as heads of larger departments are prone to sudden retirement. But for the most part, Goldman’s changes look like bad news to anyone in the Marcus consumer banking sector. The Marcus Consumer Banking segment was suddenly taken over by a much larger Wealth and Wealth Management division after posting a cumulative $4 billion loss. Conversely, this seems like good news for anyone engaged in TxB, a transactional banking business to which an entire division is assigned. Goldman’s changes in investment banking and global markets may seem less significant on the surface, but they could have real impact. They will highlight the extent to which Goldman remains an investment bank despite all its diversification attempts. Banking and global markets operations generated 78% of the company’s revenue in the second quarter. Goldman’s combination of global markets and investment banking business could undermine the small investment banking business’s internal influence as earnings plummet and bonus pools are finalized in 2022. Currently, the investment banking business is jointly led by Jim Esposito and Dan Dees and the global market is led by Ashok Varadhan and Marc Nachmann. Nachmann is already moving into a new asset and asset management department, and it is likely that either Dees or Esposito will move. Goldman Sachs is due to report third-quarter results tomorrow, and, like other banks, it is likely that earnings in the investment banking sector will plummet. These changes could leave investment banks more exposed to cuts and massive bonus clearances. But likewise, high-performing bond traders this year could argue that they will now be more obligated to cross-subsidize their single-divisional investment banking colleagues. Fixed income traders who thought they would get big bonuses as part of their standalone global markets business may find their bonuses much smaller because they slept with poorly performing investment bankers. Separately, if the bank wants to cut costs and truly get rid of you, giving up on a few salaries won’t make much of a difference, according to Deutsche Bank’s Elisabeth Maugars, a sad story. As MD, Maugars sued Deutsche Bank for gender and age discrimination. Bloomberg reported that her DB freed her from her round of cost savings in early 2020. She was 57 at the time she was her age. Maugars claims that her colleagues at her Deutsche called her Christine Lagarde in reference to her French nationality and her white hair. Meanwhile… Morgan Stanley’s James Gorman said the bank is looking at the number of employees. “We are clearly looking at the number of employees… Considering the growth rate we have had over the past few years and we have learned a few things about how we can operate more efficiently during Covid. Between now and the end of the year. That’s what management is working on.” (Financial News) Citi still hires bankers. “We continue to invest in building our teams for long-term growth opportunities including healthcare, technology and energy,” said Jane Fraser, Citigroup CEO. “And we’re excited to be working with some great bankers who are attracted to both our platform and our culture.” (Reuters) Jamie Dimon says JPMorgan won’t wait for hiring until next year and the bank is still spending as promised on Investor’s Day. (Business Insider) KPMG promoted 108 new partners, but they couldn’t share the profits. (Times) The UK’s Financial Supervisory Authority (FCA) wants 15 people, including senior and junior data analysts in digital assets, to work in its wholesale crypto policy department. (Financial News) Click here to create a profile on eFinancialCareers. Expose yourself to recruiters looking for high-bonus jobs, even when your co-workers are performing poorly. Have a confidential story, tip or comment you’d like to share? Contact: First, sbutcher@efinancialcareers.com. Also available for Whatsapp/Signal/Telegram (Telegram: @SarahButcher) Join us by leaving a comment at the bottom of this article. All our comments are reviewed by people. Sometimes these people may be sleeping or away from their desk, so it may take some time for your comments to appear. It will eventually do it – unless it’s abusive or libelous (and not in this case). Photo courtesy of Clark Tai by Unsplash.
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