When reports surfaced late last month that Goldman Sachs would likely begin a fresh round of job cuts, it came as a bit of a surprise. The firm closed 2012 with a strong fourth quarter and was said to have attacked its redundancy problem ahead of its competitors. Then this report came to light.
Commodity trading, a business Goldman has virtually owned throughout its history, took a worse-than-expected nosedive in 2012, with revenues falling 24% from a year earlier, according to research firm Coalition. Goldman suffered worse than others, watching its commodity revenues fall from $1.6 billion in 2011 to $575 million last year. In 2009, the firm generated $4.6 billion in revenue.
Goldman is not alone. Morgan Stanley reported a 20% drop in commodity revenues in 2012. J.P. Morgan saw a 16% dip. The report identified increased regulation and capital sensitivity as the main drivers behind the slump – factors that aren’t likely to change in coming years. In fact, more aggressive cap requirements and stricter regulations – like the Volcker rule – are on their way. Trading volumes and market volatility are also at recent lows.
With lackluster returns, staffing in commodities trading groups at large banks declined by nearly 6% last year, according to the report. The next victims may reside at J.P. Morgan, which grew its commodities business over the last few years while Goldman and Morgan Stanley took more of a wait-and-see approach. Industry experts told Reuters that J.P. Morgan may look to decrease costs in its commodities division – made up of around 600 people – to boost profitability. Stay tuned.
Not Enough to Stay (eFinancialCareers)
Compensation for asset managers is up, but not enough to keep star performers. Many top employees will likely move on once bonuses are paid.
Know Any Good Consultants? (WSJ)
Spain's bank bailout fund plans to reach out to strategic consultants to develop a long-term strategy for managing its portfolio of nationalized lenders.
New Chairman for Goldman? (CNBC)
Goldman Sachs’ next shareholder meeting will include an important proxy vote. Investors will decide whether or not to strip Chief Executive Lloyd Blankfein of his chairman role.
A Call for Leniency (Bloomberg)
Zvi Goffer, a former trader at Galleon Group who was sentenced to 10 years in prison for insider trading, is asking a federal appeals court for an abbreviated sentence, claiming he was unfairly punished for pleading not guilty.
Check Your History (WSJ)
No one can argue that February’s job numbers weren’t overwhelmingly positive. But check your optimism slightly. The last two times we’ve seen a hiring boom, growth quickly subsided in the following months.
Pricey Boxer Shorts (Bloomberg)
Florian Homm, the German hedge fund manager who has spent the last five years on the run after being accused of defrauding investors, was arrested in Italy last week. The 53-year-old founder of Absolute Capital Management, who allegedly fled with $500,000 hidden in his underwear and luggage back in 2007, faces up to 75 years in prison.
Buzz Around the Office
Fairly Unobservant (NY Daily News)
Traffic cops in Michigan ticketed an illegally-parked pickup truck two days in a row, not realizing that a dead man was sitting in the passenger seat.
List of the Day: Getting Referrals
When it comes to getting a job, it’s often more about who you know than what you know. Here’s how to increase your chances of getting a referral.
- Tell people what you do for a living.
- Actively network online.
(Source: AOL Jobs)