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Morning Coffee: Goldman’s messy bid to stop its best fixed income traders leaving

The three headed beast

The three headed beast

Post-bonuses, more traders are leaving Goldman Sachs. Bloomberg reports that Uberto Palomba, co-head of emerging markets trading for EMEA, and Jonathan Tipermas, head of Goldman’s US dollar swaps desk, are both quitting for Citadel. Palomba will join Citadel’s fixed income fund in London. Tipermas will join Citadel’s fixed income fund in New York.

The two moves follow allegations that Nick Bhuta, head of Goldman’s Eurogoverments bond business, had left for hedge fund Tudor Capital. Goldman Sachs does not discuss compensation, but headhunters told us Goldman paid its fixed income staff poorly after a difficult 2013. “This is why you are seeing so many people leaving,” claimed one. Unlike many other banks, Goldman didn’t significantly rein-in risk taking in 2013. 

In what may be an attempt to staunch the flow of senior traders and get to grips with the fixed income business at a difficult time, Goldman has promoted one of their brethren. Ashok Varadhan, head of macro trading in the securities business, is being promoted to co-head of the securities division at the firm. In the past, Varadhan has been both global head of FX and global head of fixed income, currency and commodities emerging markets. The memo announcing his appointment praised Varadhan’s ‘deep understanding’ of the securities business.

But while Varadhan may bring a better understanding of Goldman’s future in fixed income to senior management, it also looks like a messy solution. His appointment means the firm now has three heads of its securities division – Varadhan, Isabelle Ealet and Pablo Salame.  Ealet is a former commodities trader and Salame came up through the credit, mortgages and equity derivatives ranks. Varadhan may bring some broader fixed income currencies and commodities (FICC) expertise, but his appointment could also be the cue for a power struggle as the FICC businesses’s three heads struggle for supremacy. In the meantime, hedge funds will continue to circle Goldman’s best staff.

Meanwhile:

What you can do at Goldman Sachs in Bangalore. (Goldman Sachs)  

Sixty-four partners exercised options last month that yielded them $77 million in shares. The awards were granted at an exercise price of $78.78. The shares closed last week at $161.93, after climbing more than 38 percent each of the past two years. (Bloomberg) 

Bonuses for some Goldman partners said to be cut by 30%. (Quartz) 

Let this be a warning to anyone who employs the child of a client. (Bloomberg) 

No, you can’t go and work for UBS and Credit Suisse in Switzerland. (Financial Times) 

A new banking standards board is set to create a league table of lenders’ ethical behaviour and staff qualifications. (Financial Times ) 

“Over time the ambition would be to encourage the development of banking as a profession, along the lines of accountancy or the law.” (Financial Times) 

Where to live in London if you never want to be flooded. (Climate Group)

 

 

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