Goldman Sachs lost ground in Asia during the fourth quarter and has disappeared altogether from major regional league tables. But no matter – candidates in Hong Kong and Singapore are still clamouring to work there.
Net revenues for Asia were $1,261m in Q4 2017, down 10% from the previous quarter ($1,394m) and down 4% year on year ($1,318m), according to Goldman's fourth quarter earnings. The bank fared better for the year as a whole in Asia, however – revenues were up 9%.
Where should you work within Goldman’s front-office in Asia? Its regional results aren’t split out by division, but new league tables strongly suggest the answer is…M&A.
Goldman ranks fourth for 2017 ex-Japan Asia M&A revenue (behind Morgan Stanley, J.P Morgan and Credit Suisse), although that’s down two spots from last year, according to Dealogic. As we noted yesterday, tier-one western banks are maintaining their grip on Asian M&A income because they offer cross-border and industry expertise that their Chinese competitors find hard to match. Globally at Goldman, net revenues in financial advisory were $772m for the final quater, 9% higher than in Q4 2016.
It’s a different story in both ECM and DCM for 2017 – Goldman doesn’t make the Asian top-10 in either field as Chinese firms dominate. Like most global insitutions, Goldman is losing out as Chinese banks win lucrative Hong Kong IPOs from the mainland private companies that are increasingly dominating new listings in the city. Annoyingly from Goldman, though, Morgan Stanley still managed to place fourth in ECM.
Goldman’s Q4 revenue fall in Asia comes despite recent expansion efforts in the region. Goldman is trying to rebuild its top Asian ranks following a cull of MDs in 2016. Its IBD co-head, Gregg Lemkau, said late in August that he wanted to add more senior bankers in Asia, especially in China.
The bank is among several foreign firms – including Morgan Stanley, Citigroup, UBS and Credit Suisse – expected to step up their hiring in China over the long term following Beijing’s landmark decision in November to finally allow them majority stakes in joint ventures with mainland securities companies.
Goldman should have few problems filling new jobs in Asia. Revenue blips such as its Q4 results have no impact on its elite status in the minds of job seekers in Hong Kong and Singapore, says an investment banking headhunter.
“It was the only bank I applied to and wanted to work for,” adds a recently joined analyst in Hong Kong. “Everyone here is very driven and has a clear sense of direction.”
Starting your career at Goldman in Hong Kong is potentially even better than working in the bank’s New York office, analyst Quentin Tam (not his real name) told us last year. “In the US, many clients already know the deal process and there are far fewer hiccups along the way, but in China we often encounter problems. This is bad for the bank – especially if the deal falls through – but it benefits me, giving me more exposure to challenging situations at a young age. Goldman juniors quickly become battle hardened in Hong Kong.”
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