So, yesterday was Goldman Sachs' second quarter results day. As we reported yesterday, the firm did better than expected. It also increased pay and headcount year-on-year.
However, there was more to Goldman's results than a simple good news story for its employees. During the conference call to discuss the second quarter results announcement, Goldman CFO Harvey Schwartz divulged that:
- Goldman feels "pretty comfortable" about the size of its business right now. From this we deduce that there won't be any layoffs soon.
- Goldman's hiring for its asset management business. Schwartz said Goldman's clients are concerned about the potential for rising interest rates and are seeking, "unconstrained fixed income strategies" and "uncorrelated returns in their portfolios." From this we deduce that Goldman may be hiring high alpha fixed income fund managers and investors in uncorrelated asset classes, like infrastructure.
- Goldman's been working on its "pyramid." The firm wants to reestablish a structure in which there are loads of analysts and associates, a lot of VPs, quite a lot of EDs, not many MDs and hardly any partners. Rather than hiring at the junior end, however, Schwartz intoned that the emphasis has been on getting senior staff to leave quietly.
- Goldman's M&A bankers have been incredibly busy. Schwartz said that the announced M&A deals that Goldman's working on are up 140% so far this year compared to last year, which is twice the rate of growth in the market as a whole. This might explain why one M&A associate who left Goldman Sachs in June complained that he'd worked 90-100 weeks, including weekends...
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