Goldman’s revenue is off 14%, trading activity is down, advisory work remains muted and its prop traders are heading for the doors.
That seems like a recipe for reduced headcount. Not at Goldman. Goldman has been busy hiring. Deal Journal colleague William Wright reports over at Financial News that Goldman has increased its headcount by 19%, or 5,600, in the past 18 months.
The hiring is not taking place in New York or on the investment banking side, though.
“Goldman Sachs said it was taking advantage of market dislocation to expand its operations in Asia and Europe, to build up in asset management, and to boost risk management.
“On a conference call with analysts and investors this week to discuss its third quarter earnings, chief financial officer David Viniar said a lot of the recent recruitment was related to the new regulatory environment for the industry with hundreds of staff hired “on the risk management and control side of the firm.’”
Goldman’s biggest expansion plans are for is asset management group, according to Wright.
“One analyst who covers the sector said Goldman Sachs has made a strategic decision to shift the balance of its business towards asset management. He said less-heavily regulated businesses, such as asset management, would command a higher valuation in future compared with businesses such as trading or investment banking. This is because revenues and earnings from asset management are less volatile than in trading or capital markets, and the business consumes less capital.
“Revenues at GSAM in the first nine months of this year increased by 3% to $2.94bn, only a few hundred million short of the $3.22bn in revenues at Goldman Sachs’ high-profile investment banking business.
“Over the past six years, the asset management division has contributed an average of 11.0% of Goldman Sachs’ revenues, according to analysis of its earnings releases, compared to 13.8% from its investment banking division. “
