Goldman Sachs on Thursday defended itself after a rare public attack from within its own ranks after a departing vice-president depicted a “toxic” culture at the Wall Street bank where executives referred to clients as “muppets”.

Greg Smith, a London-based middle-ranking banker at Goldman’s equity derivatives business, launched a scathing attack on his employer of almost 12 years, saying that he was resigning after a change in culture over the past decade that had placed clients at the bottom of the bank’s priorities.

“It makes me ill how callously people talk about ripping their clients off,” he wrote in an opinion piece for The New York Times. He said he had seen five managing directors refer to their own clients as muppets in an environment that prioritised extracting the maximum profit from them.

“When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch,” Mr Smith wrote. “I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.”

People close to Goldman’s board expressed concern about the article and other bankers are privately questioning the company’s leadership. It is only the latest in a series of allegations that Goldman sacrifices clients’ interests to its own but it is the first public suggestion from inside the company.

Mr Blankfein and Mr Cohn sent a 500-word memo to Goldman employees on Wednesday, saying the bank would “examine” issues brought up by Mr Smith.

“In a company of our size, it is not shocking that some people could feel disgruntled. But that does not and should not represent our firm of more than 30,000 people,” the executives wrote. “But, it is unfortunate that an individual opinion about Goldman Sachs is amplified in a newspaper,” they added.

While the bank denied Mr Smith’s characterisation of the firm as a “toxic environment”, the article has set off another wave of speculation over Mr Blankfein’s future, and fresh scrutiny of how the company is adapting to a post-financial crisis world under his leadership.

Shares in Goldman Sachs have outperformed the competition in recent months, but at around $120, they are far short of the high of almost $248 reached in 2007.

Goldman has been wracked by scandals since the financial crisis – the most recent being its role as an adviser on a $38bn merger. A US judge cricitised Goldman’s “conflict of interest” in the deal.

The bank suffered another blow two years ago when US authorities accused it, aided by the hedge fund manager John Paulson, of creating and selling a security that was in effect set up to fail.

Goldman paid $550m to settle the charges, acknowledging that it made a “mistake” when it came to disclosure.

At the same time, the bank’s business model is being pressured by new financial regulation such as Basel III capital requirements and the Volcker Rule, which prevents the company from trading for its own account.

Mr Smith resigned from his position in US and Latin American equity derivatives sales for Europe at Goldman on Tuesday, shortly before his opinion was published.

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