As Goldman Sachs makes its annual round of redundancies, insiders say risk managers have been among the first to feel the squeeze. This appears to have come as a shock in a function that's become used to being treated gently, both at Goldman and elsewhere.
Goldman isn't commenting on its layoffs, which are only understood to have affected 5-10% of the bank's risk management division, in line with annual cuts elsewhere in the firm. One insider, however, suggested the cuts in risk appeared higher than in previous years. Another said both analysts and MDs are being let go, with up to 40 seemingly asked to leave.
The trimming in risk comes after all banks beefed up headcount in their risk management divisions under pressure from regulators in the years following the financial crisis. It also comes as most banks are now looking to make their risk spending more efficient thanks to automation.
In an indication of the direction of travel for the risk function, Goldman Sachs this month appointed a new global head of risk informatics in the form of Murad Nayal, its former head of market risk core technology. As we reported in July, Goldman is building a new risk and analytics system for its fixed income business from the ground up.
There have also been changes to Goldman's risk function after the retirement of Craig Broderick, Goldman's chief risk officer for 32 years, at the start of 2018. Broderick was succeeded by Robin Vince, formerly Goldman's treasurer. Last year's promotions saw the elevation of Andrew Philipp, the bank's global head of market risk (and the man previously in charge of a sub-group known as MRCA - market risk and capital analysis), to the level of partner. Philipp is said to have effectively displaced Robert Barry, the previous chief market risk officer, and insiders say Philipp's move has led to jostling within his MRCA group.
As Goldman trims its London risk team, it has been adding risk talent in Frankfurt ahead of Brexit (although the two things are not understood to be related). In February last year, for example, Thomas Degn-Petersen moved from India to Frankfurt to head the federation (back and middle office) at Goldman's office in Frankfurt. Insiders say that Pierre Chavenon, a managing director in credit risk management and advisory, has also moved to Germany.
Mathew Abbott, a recruiter at GQR in London, says various U.S. banks have been moving directors and vice presidents into risk management roles in Germany as they prepare for Brexit. "It's about having the platform in place," says Abbott. "The people who are going to Frankfurt typically have eight to ten years' experience and have been working in London," he adds. "- They now have an opportunity to go to Frankfurt and work in new technical groups and on asset classes that didn't exist in a Germany before. It makes a lot of sense in a context where people are also worried about how passport issues might affect their families if they stay in London long term."
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